(in PLNm) As at
December 31, 2022
As at
December 31, 2021
Contingent return of grants from environmental funds 616 476
Legal claims 86 104
Liabilities related to bank guarantees securing exchange transactions 601 262
Usufruct of land 61 67
Other contingent liabilities 31 5
Total contingent liabilities 1.395 914

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 the shares of PGE EJ1 sp. z o.o. to the State Treasury, which took place in 2021, and in accordance with the Agreement regulating the liability of the existing Shareholders for the costs of the dispute with Worley Parsons, PGE SA may be obliged to cover the costs of the dispute in the maximum amount of PLN 98 million if it loses the dispute. Therefore, for the purpose of determining the fair value of the payment received, an estimate of the probability of losing the dispute was made. As a result, an amount of PLN 59 million was recognised in contingent liabilities and an amount of PLN 39 million in short-term 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.

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.

Other contingent liabilities

In August 2022, a 'Cost Reimbursement Agreement’ was signed between EWB1, EWB2 and EWB3 and the company constructing the installation port. The contract provides the works contractor with reimbursement of the costs incurred in the construction of the installation port in the event that the companies do not continue with the investment in question. The value of the contingent liability is estimated at EUR 6.5 million and, on a company-by-company basis, the reimbursement payment will be made on a 33.33% basis to each company. Accordingly, the potential value of the commitment from PGE Group was estimated at PLN 20 million.

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