Execution of the coal purchase agreement between PGE Electra S.A. and Kompania Węglowa S.A.

The Management Board of PGE Polska Grupa Energetyczna S.A. (the “Company”) informs that on December 22, 2010, its subsidiary PGE Electra S.A. signed the Coal Purchase Agreement for the period from 2011 to 2013 (the “Agreement”) with Kompania Węglowa S.A.

Estimated value of the Agreement over the period of duration amounts to ca. PLN 3.9 bn.

According to the Agreement the parties are entitled to the liquidated damages should the other party fail to deliver, or collect, the relevant amount of coal in a given year. The value of the liquidated damages for the Primary volumes is 50% of the net value not delivered or not collected, and for Additional volumes - 20% of the net value not delivered or nor collected. In the event of force majeure, the parties are released from the payment of the liquidated damages for improper performance of the Agreement.

The Agreement satisfies the criteria of a material agreement since its value is greater than 10% of the PGE’s equity.

Legal ground: Art. 56 section 1 point 2 of the Act on public offering, conditions governing the introduction of financial instruments to organised trading, and public companies (Dziennik Ustaw of 2009, no 185 item 1439).