PGNiG : Polska Spółka Gazownictwa has new strategy for 2016–2022

The company applied an innovative model for drafting the Strategy. For three months, employees at all levels of the organisation worked on devising a new operational concept for the company drawing on their knowledge and long-standing experience. On June 17th 2016, the PSG Management Board and the trade unions signed a memorandum of understanding, which marked the end of the process of creating a new organisational structure, strategy and incentive system.

These joint efforts produced an optimum, growth-oriented package of changes for the improved functioning of PSG. The package will not only help save 1,300 jobs, but will also facilitate pay rises and provide a more attractive set of employee benefits. It is the first time in the history of the Polish gas industry that strategic decisions concerning a company's future have been prepared and made jointly by employees and the management board.

The new Strategy assumes that the company will increase the volume of distributed gas, the number of new connections will rise, and the gas network will be steadily rolled out across the country.

The planned cumulative increase in PSG's key financial and operational parameters in 2016-2022 are as follows:

• 15.98 EBITDA [PLNbn]
• 79.06 Volume [bcm]
• 350,600 No. of new connections [connection]
• 60.79% Degree of network coverage in 2022

The changes will also be made in the company's organisational structure, to reflect the administrative division of Poland and thus facilitate cooperation with local governments and provide customers with easier access to services. Further, the changes will improve management efficiency and security of supplies. This will also restore the traditional structure of the business, in which a local gas utility is the place where most of the matters between the gas distributor and the customer is handled. The new structure has three levels:

• the Head Office,
• 17 gas distribution companies,
• 167 local gas utilities and 64 service points.

The changes will enable the company to increase management efficiency by shortening decision paths, streamlining communication, and eliminating task overlaps at the distribution companies and branches, with expected savings of approximately PLN 60m. This will be achieved primarily by creating competence areas at the Head Office.

One of the goals of the changes is to extend service to unserved regions on Poland's gas distribution map. Of the total of 2,479 communes and municipalities in the country, only 1,434 are connected to the gas network. This is why new local gas utilities will be established also in regions where the need for new connections is particularly high, that is in northern Poland and in uplands the south of the country, to effectively close infrastructure gaps on the map of Poland. By 2022, PSG intends to roll out its gas network into 74 municipalities and connect approximately 350,000 new customers.

The new structure will be more transparent and customer friendly. At present, connection decisions are made at the level of branches and gas distribution companies. After the change, such decisions will be made at local gas utilities.

PGNiG SA Communications Departmen