Polskie LNG Receives Additional EU Funds
The regional LNG Terminal in Swinoujscie received additional EU support. The amount of the subsidy from the Operational Programme Infrastructure and Environment granted for the project was increased from PLN 551.8 million to PLN 601.8 million. This additional support means that the total amount of EU funding received so far accounts for almost 30 per cent of the total cost of terminal’s construction.
Awarding additional EU funds for the construction of the LNG terminal in Swinoujscie is compliant with indicative list of individual key projects under the Operational Programme Infrastructure and Environment (OPIE) published on 29 March 2013 by the Ministry of Regional Development. Based on positive evaluation of the project’s progress, the Ministry of Economy and the Institute of Oil and Gas (the implementing authority) have allocated additional funding for this investment. In May this year the project was over 60 percent complete. The method of spending the sum (PLN 551.8 million) granted to the project so far – of which Polskie LNG SA has already received more than PLN 430 million – was also appreciated by the authorities.
The news on awarding additional funding to the project means that the total amount of EU subsidies received so far will amount to 30 percent of the total cost of the project – PLN 2.76 billion. This decision confirms that the manner of spending the previously allocated funding has been recognized – said Rafał Wardziński, President of Polskie LNG SA.
This is the second increase in funding granted to Swinoujscie LNG terminal project. In December 2012, Polskie LNG SA received nearly PLN 100 million following the transfer of appropriations from activities 10.2 and 10.3. to the activity 10.1 (within the OPIE), whose beneficiary is the LNG terminal in Świnoujscie. The recent increase of PLN 50 million results from the transfer of appropriations from other projects being already implemented under the same activity – 10.1.
This increase in funding was possible pursuant to the European Commission’s decision of 2011, raising the maximum amount of state aid allocated for the construction of the LNG terminal in Swinoujscie to PLN 925 million. Following the latest decision, from this amount the sum of PLN 601.8 million has already been allocated for this project. In spite of that, Polskie LNG intends to actively seek further funding from the OPIE – added Rafał Wardziński.
Additional funding received by Polskie LNG SA means lowers cost of project implementation and for natural gas customers – lower prices in the future, as a result of cheaper fuel the cost of which will be reflected in the regasification tariff approved by the Energy Regulatory Office.
The estimated total cost of Swinoujscie LNG terminal construction project amounts to PLN 2.76 billion. Providing sufficient funding for such a large and sophisticated project is a great challenge. Polskie LNG S.A. undertakes numerous activities aimed at ensuring necessary resources from the financial market in an exceptionally economically effective manner. The key to success is acquiring funding available on the market and most efficient disbursement of funds already allocated.
Funding Structure of Świnoujście LNG Terminal:
• Equity capital
PLN 1 018 million, or 37 percent of the total budget of the project is acquired from equity capital of Gaz-System SA, Polskie LNG S.A.’s parent company.
• European Union grants
Polskie LNG is a recipient of EU grants and covers 30 per cent of the cost of the Project from acquired EU funding, including: 2007-2013 Operational Programme Infrastructure and Environment (OPIE) – amounting to PLN 602 million and about PLN 220 million (€ 55 million) from the European Energy Programme for Recovery.
- Operational Programme Infrastructure and Environment – On 5 October 2011, Polskie LNG received a Financial Aid Notification from the European Commission up to the amount of PLN 925 million, and as early as on 13 October of the same year an agreement was signed with the Institute of Oil and Gas (the implementing authority) allocating the subsidy for the project No. UDA – POIS.I0.01.00-00-003/10-00 in the amount of PLN 456 million. On 28 December 2012 this amount was increased to PLN 552 million, and subsequently to PLN 602 million on 14 June 2013, which serves as evidence the authorities’ recognition of the manner of spending the funds to date and constitutes a fundamental prerequisite for tariff reduction. This is consistent with the sum allocated for the LNG terminal under the existing list of individual key projects under the Operational Programme Infrastructure and Environment (OPIE). Polskie LNG S.A. expects it will be possible to further increase the funds allocated by the European Commission within the limits set by the European Commission.
- EERP (so-called Recovery Plan) – On 5 November 2010, Polskie LNG SA received the European Commission’s decision granting the subsidy in the amount of € 55 million, and in December 2010 the first payment of € 16.5 million was received. The remaining funds will be gradually transferred to PLNG by the end of 2015.
• Loans from the EIB and the EBRD
Nearly 32.5 percent of the cost of construction of the LNG terminal in Swinoujscie is financed from loans granted by the European Investment Bank (EIB) in the amount of PLN 600 million and the European Bank for Reconstruction and Development (EBRD) in the amount of PLN 300 million. Funding mechanism consists in securing investment loans for the construction of Swinoujscie LNG terminal by Gaz-System company, then transferring the funds acquired to the Polskie LNG.
• Other sources
Only 0.65 percent of total project cost, i.e. approx PLN 18 million will be raised from commercial loans.