Manufacturing capital

The PGNiG Group strives to build a culture of employee engagement and drive innovation. In the case of energy companies, the problem of generation gap is becoming increasingly widespread. Despite advancing automation, the efficiency of production assets remains hugely dependent on the availability of qualified technical personnel.

PGNiG takes measures to recruit highly qualified staff and manage the generational shift through projects such as:

• ‘GeoTalent’ – an educational and internship programme targeted at students interested in future career in the E&P industry. The programme is meant to enhance the students’ theoretical knowledge and develop hands-on skills in hydrocarbon exploration, appraisal, and production from conventional and unconventional sources.
• Energy for the Future – in 2021 PGNiG continued to support the subsequent editions of the Energy for the Future programme. It is a internship programme implemented by the Ministry of Climate and Environment in cooperation with four founders of the internships, namely PGNiG, PGE S.A., PKN Orlen and PSE S.A. It aims to find the most talented students and graduates of faculties relevant to the Polish energy sector. Each participating student has a chance to gain hands-on experience and skills in their areas of interest. The sixth edition began in October 2021.
• Mentoring Academy – is an initiative designed to develop common management policies and models, provide onboarding training for new managers to embrace their new management tasks and roles, foster a culture of collaboration, and disseminate knowledge-sharing practices.

Interactions between natural capital and manufacturing capital may be analysed on several levels.

• In the Exploration and Production segment, the Group must have access to the necessary facilities and technologies to extract hydrocarbons from various deposits, including small-scale and unconventional deposits. The hydrogen competence development programme was continued in 2021.
• The Generation segment relies largely on coal assets. The Group is currently upgrading its existing generation capacities to bring them in line with the requirements of BAT. New investments will rely primarily on gas – a fuel which has significantly smaller environmental impacts.

Property, plant and equipment are the largest component of the PGNiG Group’s assets. As at December 31st 2021, their value reached PLN 50,192m. Investments in production assets require the use of external funding raised in the financial market or internal funds held by the Group. In line with the PGNiG Group Strategy ratified in March 2017, the capital expenditure guidance for 2017−2022 has been set at over PLN 34bn. Average annual capital expenditure in 2017−2022 will amount to ca. PLN 5.7bn:

• of which almost a half (45%) will be spent on hydrocarbon exploration and production,
  almost 30% will fund further development of the distribution business,
• ca. 13% will be allocated to power and heat generation projects,
• additionally, ca. 12% of CAPEX will be allocated to other selected growth projects offering attractive returns across various business areas, including distribution, trading, power and heat generation.

Renewable energy sources are a new strategic area for the PGNiG Group, with around PLN 4bn allocated to building the renewable energy segment.

In 2021, the PGNiG Group’s capital expenditure on property, plant and equipment was approximately PLN 7.7bn, having gone up by 13% year on year.

In addition to expenditure on new production assets, the maintenance and upgrades of existing plant and equipment is also a major component of CAPEX. In 2021, Polska Spółka Gazownictwa alone spent some PLN 2.18bn to roll out the gas network and connect new customers, and around PLN 0.84bn to alter and upgrade the gas network. The Generation segment bears significant costs of adapting its generation plant and equipment to BAT requirements.

In the mid- and long-term perspective, the goal of investments in the asset base is to enhance the Group’s efficiency and upscale its business. In line with the stated strategy of the PGNiG Group for 2017–2022 with an outlook until 2026, the CAPEX programme is expected to deliver cumulative 2017–2022 EBITDA of approximately PLN 33.7bn, driving long-term growth of the Group’s EBITDA in 2023–2026 to the annual average of around PLN 9.2bn.

The Group’s operations and the location of its production assets have a direct bearing on the living conditions and development of entrepreneurship across all regions of Poland.

• Many industries rely on gas as one of their key feedstocks, and the access to ‘blue fuel’ stimulates economic growth;
• The gas sector is one of the country’s major employers. The closeness and continuing expansion of PGNiG’s production assets guarantees financial stability to nearly 25,000 employees and their families;
• The regional presence of PGNiG’s production assets is also a source of taxes for municipalities and an opportunity to take advantage of CSR and sponsorship projects run by Group companies.

By engaging in the anti-smog campaign, the PGNiG Group promotes natural gas as a source of energy. The green products and services offered by the PGNiG Group to its customers included:

• supplies of environment friendly CNG/LNG to public transport and municipal companies;
• construction of CNG and LNG filling stations;
• eBOK/EKOinvoice – numerous campaigns have been run to encourage the use of electronic invoices instead of paper ones.