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Accelerate the rate of connecting new customers

The new Strategy provides for significant acceleration of development of the distribution system and for increasing the rate of connecting new customers to the grid. In previous years, PSG’s approach to the development of the gas market was reactive and, consequently, the company failed to fully realise the market development potential. At present, one of the key strategic objectives of the distribution business is to increase the pace of connecting new customers to the distribution network from about 47 thousand new connections in 2017 to about 55 thousand new connections per year (up 8 thousand or ca. 17%).

The market’s potential can be fully exploited by streamlining the connection processes (and shortening the time to approve and construct new connections), improvements in customer service, and deployment of remote channels.

Increase gas distribution volumes

The higher rate of connecting new premises to the gas network will enable PSG to increase the volume of natural gas distributed, from the 2017 target of approximately 10.6 bcm to approximately 12.3 bcm in 2022 (an increase of about +1.7 bcm, or 16%).

There is vast potential for development of Poland’s distribution network. On the one hand, the share of natural gas in Poland’s total fuel consumption is relatively low when compared with other EU countries (such as Hungary, Italy, the Netherlands, or the UK). On the other hand, the saturation of the natural gas distribution network in Poland is also relatively lower than that observed in the case of gas distribution network operators in other EU countries, for instance Italy or Spain.

The increase in the volume of distributed gas will be achieved by connecting new customers to the existing distribution network, expanding the distribution network into unserved areas, and delivering gas to customers lacking access to the gas transmission and distribution network through roll-out local gas delivery solutions.

Given the growing supply of LNG on the Polish market, PSG plans to build local distribution networks which would not be connected to the national gas system, but instead will be fed with LNG (these are known as island distribution networks). Another driver of increase in the volume of distributed natural gas will be the growing problem of smog blanketing many Polish cities and towns, and local governments’ initiatives for air quality improvement through, inter alia, promoting conversion to low carbon fuels, including gas.

PSG’s strategy for 2016-2022

Verification of the PSG strategy implemented in July 2016

In 2017, PSG revised its strategy for 2016-2022 announced in 2016, based on a new concept of company value management – PSG will pursue a policy of evolutionary growth through volume-focused initiatives, while maintaining cost discipline combined with cost optimisation of the processes. PSG has been building its portfolio of growth initiatives so that the portfolio supports the values highlighted in PSG’s strategy for 2016–2022: building company value, continuous operational efficiency improvement; search for and implementation of innovative solutions and technologies, and taking up new market challenges.

Furthermore, the Development Strategy for PSG’s High-Pressure Distribution Network for 2017−2026, adopted in April 2017, defined the directions for development of the distribution system in the ten-year horizon, including high-pressure system connections, regional increased-medium-pressure and medium-pressure networks, and the list of municipalities and communes with a potential for growth in demand for natural gas. The company identified development and modernisation investment projects as part of which nearly 3.77 thousand kilometers of pipelines and 82 high-pressure gas stations would be added to the network. The total expenditure on their implementation is estimated at PLN 3bn.

To implement the projects, PSG is continuing the efforts to raise external financing from various sources, including from EU funds in the case of growth projects. Of key importance are the funds from the Infrastructure and Environment Operational Programme 2014-2020, which are available to support investment projects to construct and alter natural gas distribution networks, as well as the possibility of obtaining co-financing for innovation and R&D projects and projects involving the use of LNG-based technologies.