Execution of the material agreement

The Management Board of PGE Polska Grupa Energetyczna S.A. („PGE”) informs that on February 15, 2012 PGE Elektrownia Opole S.A., a subsidiary of PGE, concluded an agreement with Rafako S.A., Polimex-Mostostal S.A. and Mostostal Warszawa S.A. (the „Agreement”), forming a syndicate: Rafako S.A., Polimex-Mostostal S.A. and Mostostal Warszawa S.A. (later referred to as the „General Contractor”). Subject matter of the agreement is construction of two hard coal fired 900 MW supercritical power units no 5&6 at PGE Elektrownia Opole S.A. by the General Contractor. The project will be executed in EPC formula (Engineering, Procurement, Construction). According to the Agreement, the General Contractor is obliged to execute the order within 54 months from the date of the Notice To Proceed (“NTP”) with reference to unit no 5 and within 62 months from the date of the NTP with reference to unit no 6. In order to issue the NTP, PGE Elektrownia Opole S.A. is obliged i.a. to deliver the construction permit.

The net value of the Agreement amounts to PLN 9,397,000,000, while gross value of the Agreement amounts to PLN 11 558 310 000. PGE informs that in period from February 16, 2011 till February 15, 2012 the aggregate net value of agreements concluded by companies from PGE capital group with companies forming the syndicate and their subsidiaries, including the above Agreement, has amounted to approximately PLN 9.53 billion. The aggregate value of the agreements meets the criteria of the material agreement since it exceeds value of 10% of the PGE’s equity.

Parties, after signing of the Agreement, concluded an Additional Agreement in case the Agreement is claimed invalid, should the Regional Court in Łódź admit the complaint by the syndicate of Alstom Power Sp. z o.o. and Alstom Boiler Deutschland GmbH (“Alstom Syndicate”). In accordance with the provisions of the Additional Agreement, the parties will return what they will have already provided to each other, including the return of the advance payment by the General Contractor to PGE Elektrownia Opole S.A.

Parties amended the Agreement with Annex 1 providing for risks limitation for the parties resulting from the above mentioned complaint filed by Alstom Syndicate before Regional Court in Łódź and related to Provincial Administrative Court in Warsaw sentence reversing a decision on environmental conditionings of the investment project.

The aggregate amount of the contractual penalties to be paid by the General Contractor to PGE Elektrownia Opole S.A. for failing to finish the works on schedule and not reaching the indicated performance guarantees will not exceed 30% of the unit 5 price or unit 6 price, while the aggregate amount of the contractual penalties for failing to finish the works on schedule will not exceed 15 % of the unit 5 price or unit 6 price and the aggregate amount of the contractual penalties for not reaching the indicated performance guarantees will not exceed 15% of the unit 5 price or unit 6 price together with the contractual penalties for availability, while the aggregate amount of the contractual penalties for availability will not exceed 5 % of the unit 5 price or unit 6 price. PGE Elektrownia Opole S.A. entitlement to receiving the contractual penalty from the General Contractor, as a rule precludes PGE Elektrownia Opole S.A. from seeking compensation exceeding maximum value of contractual penalty. However, the Agreement allows PGE Elektrownia Opole to seek compensation claims on general basis, shall certain conditions stipulated in the Agreement be fulfilled.

Legal ground: § 9 in connection with § 5 section 1 point 3 of the Regulation of the Minister of Finance dated February 19, 2009 on current and periodic information published by issuers of securities and on conditions under which such information may be recognized as being equivalent to information required by the regulations of law of a state which is not a member state. (Dziennik Ustaw of 2009, No. 33, item 259, as amended).