At the Polish Press Agency’s conference center, Energa Group organized a press conference where its CEO Daniel Obajtek announced the company decided not to recognize green certificate agreements.
“The Energa Group believes the agreements are invalid irrespective of the amendment to the Renewable energy act,” Obajtek said at the conference.
The CEO added that in the company’s opinion 150 agreements on wind energy should be deemed null and void because they were not signed in accordance with the law. He also added that 22 contracts did not have any reference to market prices. “Nobody makes such deals. This is a scandal,” Obajtek stressed.
The 22 contracts pertain to over 400 MW. “The capacity is not as important in this instance as generation,” Jarosław Dybowski President of Energa Obrót said.
“Somebody is responsible for those 22 contracts. Gambling contracts cannot be signed. Why do they include stipulations that do not secure the interests of the Group in any way? Can you imagine that the Group shifts billions without any coverage? We believe these agreements were signed against the law,” Obajtek argued.
When talking about the impact of the amendment to the Renewable energy sources act from this July (RES act) on the sector, Obajtek stressed the actions taken by his company do not lead to the death of the RES market. “Media reports that the RES act was written for Energa are false,” he said.
On Monday the company filed a suit regarding the nullity of the contracts, Obajtek said the main goal was to firstly secure the interests of shareholders and then to draw consequences. “We are running analyses. Once they are completed we will take further steps. Nothing will be done by force and every action has to be based on data,” the Energa CEO said.
He added that anybody could make a mistake when conducting estimates. “Perhaps back then the contracts were favorable, but nevertheless they should include proper provisions,” he added.
According to Energa Obrót a decision has been made to start court and arbitration proceedings against wind farms and banks to acknowledge the nullity of the CPA contracts.
“We chose a way that is thought-through and the least detrimental. It will definitely not have a negative impact on the company. We will defend this decision,” Obajtek said.
Earlier the company announced that Energa Obrót’s management board decided to commence court and arbitration action to ascertain the negative declaration, which was supposed to have emerged when the company signed 22 trade framework contracts with renewable energy producers on the sale of property rights that ensue from certificates of origin.
The company believes the contracts are invalid because they included an obligation to sign property rights contracts that disregarded tenders required by the Public procurement law.
Energa estimates that terminating the contracts will yield about PLN 110 m in 2018. At the same time, the Act on the Amendment to the RES Act from 20 July 2017 and the actions described in the current report will have a positive impact to the tune of PLN 2.1 bn on the Issuer during the remaining duration of the agreements.
The company explained those calculations were based on the 2016 retail sales size (19TWh) and on the individual alternative fee at PLN 42 per MWh during the duration of the contracts.
Energa: we have the right to recover about PLN 600 m
“Energa estimates that it could claim about PLN 600 m for unjust enrichment of its contractors while the 22 trade framework contracts signed with renewable energy producers on the sale of property rights that ensue from certificates of origin were implemented,” Obajtek said. The company claims over 150 agreements of this type were invalid.
“We consider 150 contracts with wind farms null and void. We are not withdrawing from the contracts, instead we consider them null and void because they were not signed in accordance with the law as they did not adhere to the requirements of the Public procurement act,” Obajtek stated during the press conference.
He explained that 130 out of those contracts had references to market prices, while 22 were extremely unfavorable to the Group. These contracts were signed for 15-20 years and cannot be terminated.
“The Group lost about PLN 260 m [annually] because of those contracts. The total loss would be PLN 2 bn before they ended. We have informed that the positive impact of the Act on renewables was PLN 150 m. If we consider the contracts null and void, then an additional positive impact is PLN 110 m. In the last three years the company lost PLN 600 m,” the CEO said.
The contracts were signed between 2007 and 2013.
In case of the 22 contracts, which the company believes were signed on the basis of non-market terms, Energa filed suits to seek annulment and sent invites to the affected contractors to sign a settlement. Sending such an invite interrupts the limitation period, which enables the company to claim compensation for unjust enrichment in the last three years.
“This is about PLN 600 m when it comes to the last three years,” Obajtek said.
When it comes to the remaining contracts, Energa-Obrót wants to authorize them retroactively, which means the company may cooperate with the contractors on those existing terms, which are considered by Energa market-based. Currently it is not necessary to apply the requirements of the Public procurement law in case of those contracts.
Energa’s board believes that corporate governance was insufficient when the agreements were signed.
“We are still checking what further steps can be taken, but we will not start with holding anybody accountable. We want to secure the shareholders’ interests in the first place,” the CEO said.
Wojciech Jakóbik/Piotr Stępiński/BiznesAlert.pl/ISBNews