Integrated report 2021

28.1 Contingent liabilities

As at
December 31, 2021
As at
December 31, 2020
Contingent return of grants from environmental funds 476 461
Legal claims 104 186
Liabilities related to bank guarantees securing exchange transactions 262 75
Contractual fines and penalties 70
Usufruct of land 67 67
Other contingent liabilities 5 37
Total contingent liabilities 914  896 

Contingent return of grants from environmental funds

The liabilities represent the value of possible future returns of funds received by PGE Group companies from environmental funds for selected investments. The funds will be reimbursed, if investments for which they were granted, will not bring the expected environmental effect.

Legal claims

Dispute with WorleyParsons

In connection with the sale of shares of PGE EJ1 sp. z o.o. to the State Treasury and pursuant to the Agreement regulating the liability of the current Shareholders for the costs of a dispute with Worley Parsons, if PGE SA loses the dispute it may be required to cover the costs of the dispute in the amount of up to PLN 98 million. The probability of losing the dispute was estimated in order to determine the fair value of the payment received. In effect, PLN 59 million was recognised under contingent liabilities and PLN 39 million in non-current provisions. The amount of the provision adjusted the result on the sale of shares as presented in these financial statements.

Bank guarantee and surety liabilities

These liabilities represent bank guarantees provided as security for exchange transactions resulting from membership in the clearinghouse IRGiT.

The increase in liabilities on account of sureties towards clearinghouse IRGiT is connected with a significant increase in prices of futures contracts concluded on TGE. The increase in electricity prices directly affects the increase in the amount of the required security deposit lodged with the in non-monetary form, this deposit is secured by a surety under which bank guarantees are accepted by IRGiT.

Usufruct of land

Contingent liabilities pertaining to the usufruct of land are related to an update of annual fees for the usufruct of land. PGE GiEK S.A.’s branches have appealed the decisions in Local Appeals Courts. The value of the contingent liability was measured as the difference between the discounted sum of the updated perpetual usufruct fees for the entire period for which perpetual usufruct was established and the perpetual usufruct liability recognised in the books on the basis of the previous fees.

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