The Company requested the tariff change for reasons that are beyond the PGNiG Management Board's control. In particular, these include an increase in costs of gas acquisition since Q2 2012, attributable to higher contract prices, and depreciation of the złoty relative to the exchange rates assumed in the applicable tariff. Further, the decision to request a change in the tariff followed from the need to increase the volume of mandatory stocks of natural gas, which the Company is statutorily required to build and maintain. As of October 1st 2012 the required volume of mandatory stocks will increase from 20 to 30 days of the Company's average daily imports.

The refusal to approve the tariff was preceded by three inquiries by the President of the Energy Regulatory Office with the Company, which extended the tariff review process to over 90 days. In the opinion of the PGNiG Management Board, the protracted review process and the refusal to approve the tariff will have an adverse effect on the Company's financial performance. The fact that the costs of gas supplies have not been reflected in the current tariff contributed to a PLN 658m loss recorded in Q2 2012 by the Trade and Storage segment, with a cumulative loss for H1 2012 of more than PLN 1.4bn.

As the inventories of stored gas must be recognised at realisable prices, the loss on gas sales will further add the Company's costs related to the higher impairment loss on gas stocks (as at June 30th 2012, the impairment loss amounted to PLN 66m).

Joanna Zakrzewska

PGNiG SA Press Officer