3.2 Operating expenses
Accounting policies
Cost of gas
This item comprises the cost of gas purchased on gas exchanges and from trading partners. The cost of purchased gas includes a reasonable portion of costs of system and transaction charges, costs of domestically produced gas, as well as costs of nitrogen rejection and regasification. For further information on accounting for those items, see Note 6.2.1.
Raw materials and consumables used
This item comprises the costs of raw materials and consumables used in principal business activities, in particular fuels for electricity and heat generation. Another material item in this cost group is the cost of electricity for trading.
Employee benefits expense
Employee benefits expense includes in particular salaries, wages, social security contributions and cost of future benefits. For details of employee benefits expense, see Note 6.3.1.
Transmission and distribution services
In connection with its transmission and distribution services, the Group incurs costs of services it contracts from third parties (this does not apply to costs related to comprehensive agreements, in which the Group acts as an agent (described in Note 3.1.)). The transmission and distribution system operators charge the Group for the cost of transmission services, i.e. the cost of transmission of gas fuel via the network of pipelines, the cost of heat transmission and the cost of electricity distribution.
Other services
This item comprises cost of third-party services, other than transmission services, required for the core activities of the Group companies.
These include in particular:
- Regasification services, which involve changing the physical state of gas from liquefied to gaseous form by heating the liquefied material;
- Repair and construction services and services related to repairs of production machinery and equipment, in particular equipment associated
with heat generation; - Mineral resources production services related to hydrocarbon production;
- IT services
Taxes and charges
This item includes in particular property tax expense and royalties for hydrocarbon production.
Recognition and reversal of impairment losses on property, plant and equipment and intangible assets
For details of impairment of non-financial assets, see Note 6.1.3.
Depreciation and amortisation expense
This item comprises depreciation/amortisation expense on property, plant and equipment, right-of-use assets and intangible assets, calculated at
the adopted depreciation/amortisation rates (for details, see Note 6.1.1 and Note 6.1.2).
| (in PLN million unless stated otherwise) | ||
| 2021 | 2020 | |
| Cost of gas | (43,758) | (19,808) |
| Gas fuel | (45,348) | (19,512) |
| Adjustment to gas cost due to hedging transactions | 1,590 | (296) |
| Effect of the annex executed with PAO Gazprom/OOO Gazprom Export on cost of gas in 2014–2019 | – | 4,915 |
| Other raw materials and consumables used | (4,168) | (3,224) |
| Fuels for electricity and heat generation | (914) | (909) |
| Electricity for trading | (2,708) | (1,810) |
| Other raw materials and consumables used | (546) | (505) |
| Employee benefits expense | (3,480) | (3,381) |
| Salaries and wages | (2,605) | (2,463) |
| Social security contributions | (470) | (449) |
| Long-term employee benefits | (50) | (134) |
| Other employee benefits expense | (355) | (335) |
| Transmission services | (1,159) | (1,048) |
| Other services | (2,112) | (1,888) |
| Regasification services | (343) | (388) |
| Repair and construction services | (261) | (265) |
| Mineral resources production services | (326) | (190) |
| Rental services | (95) | (95) |
| Other services | (1,087) | (950) |
| Taxes and charges | (1,226) | (911) |
| Recognition and reversal of impairment losses on property, plant and equipment and intangible assets | 391 | (1,786) |
| Cost of exploration and evaluation assets written-off | (626) | (198) |
| Impairment losses on property, plant and equipment | 1,009 | (1,577) |
| Impairment losses on intangible assets | 8 | (11) |
| Depreciation and amortisation expense | (4,031) | (3,424) |
| Total | (59,543) | (35,470) |
Impact of the COVID-19 pandemic on the PGNiG Group’s operating expenses
In 2021, the PGNiG Group incurred operating expenses related to the purchase of personal protective equipment (recognised in the line item Employee benefits) and other materials (recognised in the line item Raw materials and consumables used), for a total amount of PLN 2.1m.
In 2021, the Group also received PLN 6.7m the Guaranteed Employee Benefits Fund, recognised in the line item 'Other incom and expenses’ (Note 3.3).