TAURON Polska Energia : Current Report No. 5/2017

28.02.2017 10:50

The Management Board of TAURON Polska Energia S.A. (the 'Issuer') informs that on 28 February 2017, the management board of the Issuer's subsidiary - TAURON Wytwarzanie S.A. (the 'Contracting Authority') decided to sign an annex (the 'Annex') with RAFAKO S.A. - MOSTOSTAL WARSZAWA S.A. consortium (the 'Consortium', the 'Contractor') to the contract for construction of 910 MWe ultra-supercritical power unit (the 'Unit') at Jaworzno III - Elektrownia II power plant (currently implemented within the separated branch of the Contracting Authority - 910 MW Jaworzono Branch in Jaworzno) in the scope of: steam boiler, turbine set, main building, electrical and process control and automation system (AKPiA) of the Unit (the 'Contract').

Signing of the annex under the terms indicated below on 28 February 2017 was also positively evaluated by the Issuer's Management Board. Signing of the Annex by all parties to the Contract is scheduled in the first half of March this year.

Pursuant to the Annex, net price of the Contract will be increased by the amount of PLN 71.05 million (i.e. up to the amount of PLN 4,470 million), and the deadline for delivery of the subject matter of the Contract will be extended by 8 months (i.e. by the 67th month following the date of concluding of the Contract at the latest, which means that the new assumed deadline of handover of the Unit for operation is November 2019).

Introduction of amendments to the Contract resulted from the requirement to change the foundation method of the Unit facilities to indirect method as well as arrangement of additional works by the parties, favourable for the Contracting Authority for technical and economic reasons (construction of the foundation for the fifth zone of the electrofilter (EF) and extension of the EF switchboard building). The additional works will enable the Contracting Authority to gain savings during the envisaged shutdown of the Unit in 2021 in order to adjust a part of the Unit for the purpose of fulfilment of future requirements of BAT conclusions. In the course of the negotiations the Contracting Authority partly acknowledged the legitimacy of the Contractor's claims associated with the aforementioned circumstances and variation order requests. Claims arising from the change in design standards (EUROCODES) were not deemed legitimate by the Contracting Authority.

In connection with the foregoing, under the Annex to the Contract warranties granted by the Contractor will be extended:
- by 6 months in relation to the availability of the Unit for direct deliveries carried out by RAFAKO S.A., maximum sustainable efficiency of the boiler, technical minimum of the Unit and content of free water in exhaust behind IOS, vibration level for the structure,
- by 12 months in the construction and engineering scope of the Unit. The Contractor shall also ensure adequate extension of the performance bond.

Signing of the Annex will change the terms of the Contract with the Contractor, however, it will not result in any changes of the whole investment budget. As at the day of submission hereof, the progress of the project amounts to approximately 31.8%. At present, the assembly of the technological part of the boiler and assembly of steel constructions of the main buildings is in progress. Reinforced concrete works in the electrical switching station building, erection works of the cooling tower and construction works in the building of the electrical nave and cooling water pump station are continued.