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In 2017, PGNiG also signed new contracts to sell gas in Poland, which were an effect of the Company’s consistent pursuit of its policy of high quality customised sales.

The product range is updated to reflect market trends and is based on transparent market criteria which, combined with constant service quality improvements, facilitates consistent implementation of the plan to increase the volumes of gas sold to key retail and wholesale customers in Poland. The measures taken in 2017 led to a year-on-year growth in the volumes of high-methane grid gas sold to retail and wholesale customers by ca. 55% and 65%, respectively.

Key gas supply contracts executed in 2017:

On June 21st 2017, PGNiG concluded new Individual Contracts for the supply of gas fuel with Grupa Azoty SA and its subsidiaries, with deliveries scheduled from October 1st 2018 to September 30th 2020, with an option to extend the period until September 30th 2022. Assuming that the term will be four years, the estimated value of the contracts may reach approximately PLN 7bn, with up to ca. 8.5 bcm of gas to be supplied. The applied pricing formula is based on gas market price indices.

Upon the signing of the new contracts, the Individual Contracts between the Azoty Group and PGNiG SA of April 13th 2016, originally valid until September 30th 2018, were terminated.

PGNiG signed a long-term gas supply contract with the ArcelorMittal Group, the largest steel manufacturer in Poland, effective from January 1st 2017 to January 1st 2020, with an option to extend the term until January 1st 2023. The total volume of gas to be supplied over the period may reach around 1.6 bcm, with the maximum value of the contract of approximately PLN 1.4bn. The contract enables ArcelorMittal Poland SA to purchase gas fuel on market terms, at prices linked to exchange indices.

PGNiG concluded a long-term Framework Agreement and Individual Contracts for the supply of nitrogen-rich gas to KGHM Polska Miedź SA Under the Individual Contracts, gas supplies are to start on two different dates, i.e. July 1st 2017 and October 1st 2017, depending on KGHM Polska Miedź S.A.’s points of delivery. The Framework Agreement and Individual Contracts guarantee gas supplies until October 1st 2033, with an option to change nitrogen-rich gas to high-methane gas. The estimated aggregate value of the agreement over its entire term is ca. PLN 4.8bn. The applied pricing formula is based on gas market price indices.

On October 25th 2017, PGNiG signed a new Individual Contract for the supply of gas fuel to Grupa Lotos SA, effective until September 30th 2020, with an option to extend the term until September 30th 2022. If the option is exercised, the value of the contract is estimated at approximately PLN 3.1bn. The applied pricing formula is based on gas market price indices.

Marketing policy with respect to business customers (contracted capacity >110 kWh/h)

In the first half of 2017, subsequent editions of the ‘Elastyczna Cena’ (Flexible Price) scheme for PGNiG OD’s largest accounts were launched and covered contracts concluded for 2017, 2018 and 2019. Further, new editions of the ‘Stałe Oszczędności dla Biznesu’ (Constant Savings for Business) scheme were launched for customers in the W-5 tariff group, as were the ‘Pewna cena’ (Certain Price) and ‘Wycena Indywidualna Suwak’ (Individual Pricing – Zipper Mechanism) products. The ‘Pewna Cena’ promotional campaign was addressed to PGNiG OD’s current customers. Under the scheme, customers were offered discounts on the standard tariff price. Due to strong interest of customers from the W-5 tariff group in the aforementioned promotional campaign, in June 2017 PGNiG OD launched the second edition of the scheme.

The ‘Tranche Products’ were also developed, fully linked to instruments listed on the Polish Power Exchange. These products enable customers to independently define planned consumption covered by the contract in an optimal way, based on annual, seasonal, quarterly or monthly instruments available at the Polish Power Exchange.

To retain its business customers, in August 2017 PGNiG OD launched a discount scheme for the other gas users in the BW-5 tariff group, connected with mass delivery of the ‘Biznes Online’ (Business Online) product and, in late November and early December, mass delivery of the ‘Stałe Oszczędności dla Biznesu’ (Permanent Savings for Business) product.