Ostrołęka C provoked a heated discussion during the General Meeting of Shareholders of Enea on 20 May 2019. The shareholders are seriously concerned about the growing debt of the company, which, as one of them said, "has been running up a debt to invest in something that does not bring profits".

On May 20, 2019, the Annual General Meeting of Enea was held. The shareholders exercised their right and asked the Management Board several dozen questions, the most challenging of which were those about the rationale behind the coal-fired power plant in Ostrołęka.

Individual shareholders wanted to know whether the financial model of this investment took into account the risk of CO2 price increases exceeding EUR 30 or even EUR 50. Another issue brought out was transport of coal, which is to be delivered to Ostrołęka from as far as Silesia by the Polish Mining Group – PGG (the cost of which was estimated by the inquirer at PLN 1.50 - 2 per GJ). A question was also asked about the details of the inspection of the Ostrołęka C project by the Supreme Audit Office (NIK) and the Office of Competition and Consumer Protection (UOKIK) and about the analysis of the profitability of the Ostrołęka C project in relation to the profitability of gas units, which could be an alternative to this power plant. However, the most important question was: what about the further financing of this investment, which costs over 6 billion PLN yet so far only Enea and Energa cover PLN 1 bln each.

The company's communication of 2 May [on the agreement with Energa on financing the Ostrołęka C project - editorial note] states that the parties undertook to strive to ensure that the results of the Ostrołęka C Power Plant will not be consolidated with their results. Since Enea holds a 50% stake in a project that it does not want to consolidate, it means one thing to me - according to your financial analyses the project is loss-making - commented one of the shareholders.

The representative of another shareholder, FIP 11 FIZAN, demanded information on how the risk of possible failure to achieve the economic goal, i.e. the construction of Ostrołęka C, is monitored.

The Management Board left most of the questions unanswered, committing itself to provide answers in writing, while those that were provided should be considered at least disturbing.

The Management Board announced that the increase in costs resulting from the rising prices of CO2 emission allowances should be compensated by the growing revenues from sales. In other words, new and existing coal investments will be paid for by energy consumers - Enea's clients - in increasingly higher electricity bills.

The Board also confirmed that the company's current strategy does not at all take into account the CO2 reduction path required by effective climate protection, which is called for by the IPCC and was included in the long-term strategy of the European Commission that assumes that the Community will achieve climate neutrality by 2050. Will it be included in the company's new strategy, which is to be published later this year?

The Management Board also claims that "there are still many insurers on the market ready to insure coal". Considering that world reinsurance leaders and 6 out of 8 leading European insurers so far involved in Polish coal projects have already announced the end of coal investment support, what market does Enea have in mind? Could it be that the company is counting on banks and insurers from the East?

For another year in a row, the Management Board requested that no dividend be paid to shareholders and that the profit earned the previous year be allocated to the share capital reserve, although the reserve capital already allocated amounts to over PLN 9.9 billion. Outraged by this decision, an individual shareholder submitted a formal application for payment of a dividend of PLN 0.20 per share. Enea will not pay dividends to shareholders this year.

Some of the shareholders were not satisfied with the Management Board's replies. Finally, at least 4 individual shareholders and FIP 11 FIZAN voted against the adoption of the separate and consolidated financial statements for 2018. The atmosphere of the Meeting can be best summed up by a statement by one of the individual shareholders who asked the company a fundamental question:

Do you have any financing for the construction of [Ostrołęka C] as of today? If not, how can you be building it? This is a power plant worth 6 billion zlotys, not a construction of greenery! I do not have any banners today. I will bring them next year - when you go bankrupt.

A number of questions about Ostrołęka C, the policy of reducing CO2 emissions by Enea and the status of the water damming threshold in Wisła for cooling the Kozienice Power Plant were also asked by a representative of Polish social organizations, including the Stop OC Coalition. The answers are to be given in writing. The coalition will make it public.


Diana Maciąg,

Climate and Energy Coordinator, Workshop for All Beings Association

e-mail: diana@pracownia.org.pl

Questions to the Enea Group Management Board:

Does investment policy of ENEA SA take into account the forecasts of electricity and CO2 emission allowances prices presented in the draft Energy Policy of Poland 2040? Have they been taken into account in the model of financing the Ostrołęka C Power Plant? If not, why?

What business benefits will the involvement in the construction of the Ostrołęka C coal-fired power plant bring to the ENEA Group? How will the involvement in the construction of Ostrołęka C coal-fired power plant by ENEA influence the company's plans to pay dividend in 2020 and in the following years?

What impact on the expected rate of return on investment in Elektrownia Ostrołęka C (IRR) has the increase in the EUA price by EUR 10?

The Development Strategy of the Enea Group until 2030 does not take into account the need to drastically reduce CO2 emissions in the horizon of 2030 and 2050. Does ENEA SA intend to take into account in its strategy the conclusions of the IPCC and the long-term strategy presented by the European Commission which assumes that the Community will achieve climate neutrality by 2050? When does ENEA intend to develop a strategy defining how the company will achieve the neutrality of greenhouse gas emissions (mainly carbon dioxide) by 2050, together with the trajectory for achieving this neutrality and the estimated CO2 emission levels in 2020, 2025, 2030, 2035, 2040 and 2045?

When will ENEA publicly announce the dates for the shutdown of coal-fired power plants owned by the company?

How do the decisions pf foreign banks and institutional investors not to finance coal projects (mines and power plants) and companies that generate more than 30-50% of electricity from coal affect the cost of capital raising of the ENEA Group and the ability to refinance debt and implement its investment programme? In particular, does the Management Board of the ENEA Capital Group anticipate an increase in financial costs in the years 2019-2020?

On 7 May 2019, the third largest insurer in Europe, Generali, publicly announced that it would not insure the existing hard coal and lignite mines in Poland. How do the decisions of 6 out of 8 insurance companies, which were involved in insurance of power plants and coal mines in Poland in the past, influence the choice of strategic options by the company and the estimated costs of insurance of planned hard coal mines? When does ENEA intend to update its strategy to adapt it to the realities of 2019 and the years to come?

The Code of Ethics of the Enea Group lists environmental care as one of the principles governing the company's activities. On 7 May 2019 the Supreme Administrative Court (NSA) upheld the verdict of the Voivodship Administrative Court (WSA) in Warsaw revoking the environmental decision which had been the basis for issuing a building permit for a temporary water damming threshold in the Vistula constructed for the purposes of the Kozienice Power Plant operation. Does Enea Wytwarzanie, in accordance with the law and its own sustainable development policy, intend to dismantle this facility, which was to be only a temporary solution yet had been a physical barrier to endangered and protected fish species (including those protected under the European Natura 2000 network) and an obstacle to shipping on the Vistula River for over a year now? If so, when, if not why?

According to media reports, despite using the aforementioned threshold for over a year, ENEA Wytwarzanie has not yet applied to the Building Supervision Authority for a formal consent for its use. Has ENEA Wytwarzanie finally submitted an application for its use, and if so, when? Has it finally obtained the appropriate consent for its use, and if so, when? If it has not submitted the aforementioned application, for what reasons and when exactly does it intend to apply for permission to use the threshold it has been using in practice since 2017?

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