Regulatory environment

Making full use of the PGNiG Capital Group's economic potential is determined by the tariff regulations issued by the President of the Energy Regulatory Authority (URE)

Law

The following legislative acts regulate the operations of the PGNiG Capital Group:

  • The Energy Law of 10 April 1997 (Journal of Laws of 2003, No. 153, item 1504 as amended) – in reference to activity concerning fuel gas trading, gas distribution and fuel gas storage;
  • The Act on Petroleum Stocks, Oil and Natural Gas Products and the Rules of Procedure in Situations Threatening the State's Fuel Security and Disruptions on the Oil Market of 16 February 2007 (Journal of Laws of 2007, No. 52, item 343) – in reference to activity connected with foreign trade in natural gas;
  • The Geological and Mining Law of 4 February 1994 (Journal of Laws of 1994, No. 27, item 96 as amended) – in reference to the extraction and associated sale of gas.

Licence

Business activity involving prospecting or exploring mineral deposits, their extraction from deposits, the non-tank storage of substances and the storage of waste in rock mass, including storage in underground mining excavations, requires a licence from the Ministry of the Environment. As at 31 December 2009, PGNiG held:

  • 82 licences to prospect for and explore crude oil and natural gas deposits;
  • 215 licences to extract crude oil and natural gas from deposits;
  • 9 licences for underground gas storage facilities (USG);
  • 3 licences for storage of waste.

Tariff policy

The gas market in Poland is regulated by the Energy Regulatory Authority. This regulation primarily establishes tariffs, the level of which determines the possibility of obtaining revenue which takes into account justified costs as well as the profit from the capital invested.  The PGNiG Capital Group therefore considers making the company's revenue independent of those regulations to be a key element of its pricing policy.  At present, the amount of revenue depends mainly on the level of fuel sale prices, which are regulated officially and directly connected with the tariff determination method used.  The principles of determining tariffs are specified in the executive legislation for the Energy Law, above all in the tariff regulation. 

In the tariff determination method used, prices and charge rates are specified on the basis of forecast costs and planned natural gas sale volumes, with account being taken of the costs of acquiring gas from all possible fuel gas supply directions – both from imports and domestic production. In practice, this means that both foreign trading and domestic production are subject to pricing regulations. Taking account of these two sources of costs in calculating tariffs, given the current higher levels of imported gas purchase prices, had the effect of determining the tariff price applied in settlements with customers at a level lower than that which would result from imported fuel purchase costs.