6.3.3 Other provisions
Table of contents
Accounting policies
Provision for certificates of origin and energy efficiency certificates
If at a reporting date the number of certificates is not sufficient to meet the requirements stipulated in the Polish Energy Law and the Energy Efficiency Act, the Group recognises a provision for cancellation of certificates of origin and energy efficiency certificates or for the payment of emission charge, whichever of the two is lower.
The provision is measured based on the carrying amount of the certificates held and the then current price (on the Polish Power Exchange) of certificates which should be additionally purchased to meet the cancellation requirement resulting from the volume of electricity sales to end users.
The provision and the registered certificates of origin disclosed under inventories (see Note 6.2.1.) are accounted for at the time of registering their cancellation in the Register of Certificates of Origin maintained by the Polish Power Exchange (PPX).
Provision for liabilities associated with exploration work abroad
In 2013, the Parent recognised a provision for liabilities associated with the exploration work carried out by PGNiG Upstream North Africa B.V., PGNiG’s subsidiary.
Owing to the Force Majeure risk present in Libya, PGNiG Upstream North Africa B.V. has suspended operations. Therefore, the Parent has been maintaining a provision for licence obligations under licence agreements concluded with the Libyan government.
Provision for claims under extra-contractual use of land
In the ordinary course of business, the Group installs technical equipment on land owned by third parties, often natural persons. Where possible, at the time of installing the elements of the infrastructure, the Group enters into agreements establishing standard land easements and transmission easements.
The Group recognises a provision for claims under extra-contractual use of land in respect of those claims which have been confirmed to be valid (the claimant presented a legal title to land) and in the case of which correspondence has been exchanged with the claimant in the last three years.
Significant estimates
The provision for certificates of origin is recognised as at the end of the reporting period based on the amount of electricity consumed (net of internally generated electricity consumed) and electricity sold to end customers, and based on the percentage ratios applicable to individual certificates provided for in the Regulation of the Minister of Energy and Climate Affairs (or in the event of change in the structure of the government administration – of another competent minister) and the price of individual certificates on the Polish Power Exchange as at the last trading day in the reporting period.
The provision for energy efficiency certificates is recognised as at the end of the reporting period based on the volume of electricity consumed (net of internally generated electricity consumed) and the volume of gas fuel (in energy units), electricity and heat sold to end customers (with the exceptions provided for in the Energy Efficiency Act), the applicable regulatory percentage ratios, and the average price of the entire portfolio of energy efficiency property rights.
The amount of the provision is based on the obligations contracted under the licence agreements, but not met.
The Group estimates the provision for claims under extra-contractual use of land based on an estimate survey made by an expert appraiser, or its own valuation, taking into account the size of the controlled area in square meters, the amount of annual rent per square meter for similar land in a given municipality, and the period of extra-contractual use of land (not more than ten years).
If it is not possible to obtain reliable data required to apply the method described above, the Group analyses submitted claims on a case-by-case basis.
As the amounts used in the above calculations are arrived at based on a number of variables, the actual amounts of compensation for extra-contractual use of land that the Group will be required to pay may differ from amounts of the related provisions
| Note | Provision for certificates of origin and energy efficiency certificates |
Provision for liabilities associated with exploration work abroad |
Provision for UOKiK fine* | Provision for claims under extra-contractual use of land |
Other provisions | Total | |
| As at Jan 1st 2020 | 216 | 177 | 6 | 21 | 405 | 825 | |
| Recognised provision taken to profit or loss | Note 3.3. | 243 | – | – | 2 | 460 | 705 |
| Provision reversal taken to profit or loss | Note 3.3. | (11) | – | – | (6) | (358) | (375) |
| Used | (179) | – | – | – | (12) | (191) | |
| Changes in the Group | – | – | – | – | (1) | (1) | |
| Other changes | 6 | (2) | – | 1 | (44) | (39) | |
| As at Dec 31st 2020 | 275 | 175 | 6 | 18 | 450 | 924 | |
| non-current | – | 4 | – | 10 | 121 | 135 | |
| current | 275 | 171 | 6 | 8 | 329 | 789 | |
| As at Jan 1st 2021 | 275 | 175 | 6 | 18 | 450 | 924 | |
| Recognised provision taken to profit or loss | Note 3.3.** | 310 | – | – | 8 | 322 | 640 |
| Provision reversal taken to profit or loss | Note 3.3. | (8) | – | – | (8) | (345) | (361) |
| Used | (238) | – | (6) | – | (5) | (249) | |
| Changes in the Group | – | – | – | – | 54 | 54 | |
| Other changes | 3 | 14 | – | – | (3) | 14 | |
| As at Dec 31st 2021 | 342 | 189 | – | 18 | 473 | 1,022 | |
| non-current | – | 4 | – | 12 | 244 | 260 | |
| current | 342 | 185 | – | 6 | 229 | 762 |
** Other provisions (provisions for financial guarantees), of PLN -2m, are disclosed in Note 3.4 as other net finance costs.