Warsaw, April 2nd 2014

Termination of contract for construction of the Wierzchowice Underground Gas Storage Facility

Current Report No. 42/2014
The Management Board of Polskie Górnictwo Naftowe i Gazownictwo SA ("PGNiG") announces that in relation to the project "Construction of the Wierzchowice Underground Gas Storage Facility, phase: 3.5bn m3, sub-phase: 1.2bn m3" executed under an agreement for general contractor services of November 19th 2008 (the "Agreement") by a consortium comprising PBG
S.A. w upadłości układowej (in company voluntary arrangement), TECNIMONT S.p.A. SOCIETE FRANCAISE D'ETUDES ET DE REALISATIONS D'EQUIPEMENTS GAZIERS SOFREGAZ, PLYNOSTAV PARDUBICE HOLDING A.S. and PLYNOSTAV - REGULACE PLYNU A.S. in organisational bankruptcy (the "Consortium"), on April 2nd 2014 PGNiG issued a notice of termination of the Agreement with effect from the notice date, with reference to the stage of completion of the contract as at the date of the notice.
In the grounds for the notice, PGNiG cited the Consortium's non-performance and improper or defective performance of the contract in conflict with the Agreement, as well as a delay in execution of work exceeding 30 business days, which continued unrectified even though the Consortium had been given an extended adequate deadline to remove the default.
The notice includes a call for payment of contractual penalties under the Agreement, in the amount of PLN 133.4m, payable to PGNiG within 14 days of the receipt of the notice.
The PGNiG Management Board further reports that the progress of work on expanding the Wierzchowice Underground Gas Storage Facility to 1.2bn m3 is 97%. Further steps, to be taken jointly with the Consortium, will be as-built survey and settlement of the Agreement. PGNiG intends to complete the project using PGNiG Group resources. To note, the facility has reached and maintains a storage capacity of 1.2bn m2.
See also: Current Report No. 79/2008 of October 3rd 2008 and Current Report No. 93/2008 of
November 19th 2008.

Legal basis:

Art. 56.5 of the Act on Public Offering, Conditions Governing the Introduction of Financial Instruments to

Organised Trading, and Public Companies

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