Economic analyses conducted within the scope of the Consolidation Programme confirmed the justifiability of the process and became a starting point for the approval of the plans. The consolidation process will bring about a reduction in licensing fees and costs related to the functioning of the Group's companies' management and supervisory boards. The PGE Management Board estimates that immediate savings resulting from the merging process will amount to PLN 15 million in the first year after consolidation; this sum will cover fully all costs of the operation. The total amount of discounted direct savings resulting from the mergers will exceed all related costs by about PLN 130 million.

PGE is currently carrying out intensive analytical work aimed at the precise assessment of the volume of savings resulting from the subsequent stages of consolidation. According to previous estimates, as much as PLN 1 billion may be saved during the first three years after the completion of the consolidation process.

"The results of the conducted analyses indicate that benefits generated already in the first year of the implementation of the Programme will cover the greater part of direct costs resulting from the merger. Thus, the implementation of the Programme, which is indispensable for the long-term process of building PGE's competitive advantage on the market, has a valid economic justification," says Mr Jacek Dreżewski, Director of the PGE Capital Group Consolidation Programme.

Besides, the merger plans include information on the parity of exchange between shares in the acquired companies and shares in the acquiring ones.  "In order to protect the interests of all entities holding shares in the companies covered by the merger plans, simultaneously with submitting the plans to the Court of Registration, we apply for the appointment of an independent auditor to audit the plans. The independent auditor will verify if the exchange parity has been determined properly," says Mr Dreżewski.

After the auditor has issued a positive opinion, there will be two public announcements of General Meetings convened with a view to adopting relevant resolutions on the mergers. It is the General Meetings of the Shareholders that will make the final decisions concerning the mergers of the companies in the particular operating areas of the PGE Capital Group:

• in the area of conventional power engineering, the acquiring company is PGE Elektrownia Bełchatów S.A. with the registered office in Rogowiec,
• in the area of renewable power engineering, the acquiring company is PGE Energia Odnawialna S.A. with the registered office in Warszawa,
• in the area of electricity sales to end users, the acquiring company is PGE Obrót S.A. with the registered office in Rzeszów,
• in the area of electricity distribution, the acquiring company is PGE Dystrybucja S.A. with the registered office in Lublin.

"Each shareholder will have an opportunity to review the documentation related to the merger plans. The Consolidation Programme will be completed on the date of entering the mergers in the proper register. This will entail an automatic deletion of the acquired companies from the register,"  adds Mr Dreżewski.

Shareholders will be notified of planned General Meetings by way of relevant announcements; the first one will be published with at least one month's notice, the second - at least two weeks after the first. It is planned that the mergers should be entered in the proper register on 1 September 2010.

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The consolidation of the PGE Capital Group is a formal and legal process which will result in the establishment of six subsidiaries of PGE Polska Grupa Energetyczna S.A. responsible for the following areas: Conventional Power Generation, Renewable Power Generation, Distribution, Retail Sales, Wholesale Trading and Nuclear Power Generation.

In consequence of the Consolidation Programme, the Group's current dispersed structure will be flattened, and companies with the same operating profiles, which are now independent entities, will become branches of the consolidating companies. Because of PGE's current structure of business operations, consolidation changes will concern mostly the areas of conventional power generation, distribution and retail sales, while the areas of wholesale trading and renewable power generation will be affected to a lesser extent.

The objective of the consolidation is improved management in the PGE Capital Group with a view to establishing solid foundations for its long-term development and ensuring the efficient course of investment processes.

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Additional information:

PGE Polska Grupa Energetyczna is the largest power engineering company in Poland and one of the largest such companies in Central and Eastern Europe. Thanks to the combination of its own fuel (lignite) resources, power generation and final distribution networks, PGE guarantees a safe and reliable power supply to 5 million households, businesses and institutions. The company's net power generation amounts to about 56 TWh, which constitutes 42% of the national electricity output. The installed capacity equals 12.4 GW.

The PGE Capital Group has operated under its current structure since 2007. The PGE Capital Group's major areas of activity comprise the mining of lignite and generation of heat and electricity from conventional sources, the wholesale trade of electricity and related products, the retail sales of electricity and heat, the distribution of electricity as well as the generation of electricity from renewable sources. Since 6 November 2009 PGE Polska Grupa Energetyczna S.A. has been one of the largest companies listed on the Warsaw Stock Exchange.

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Contact for the media:
Jacek Strzałkowski
Press Spokesperson
PGE Polska Grupa Energetyczna S.A.
e-mail: jacek.strzalkowski@pgesa.pl
tel.: (022) 340 19 32