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PGNiG enters €1bln credit agreement due to skyrocketing energy prices

Polish state-controlled gas utility, PGNiG entered into a credit agreement with Bank Pekao for up to 1 billion euros (4.8 billion zloty) for a 24-month period guaranteed by the government as it faces persistent high prices for gas on the physical and financial market, reports Polish media.

PGNiG entered the credit agreement using State Treasury guarantees, a mechanism provided in a regulation enacted at the beginning of the year on special solutions to protect gas fuel consumers in view of the situation on the gas market.

Some of the reasons behind evoking this Act could be “persistently high prices for gas fuel on the intraday, day-ahead and futures market (…) that is expected to continue in the upcoming quarters and concentration limits imposed on financial institutions, which are limits on the permitted amount of funding that can be provided to a single entity or a sector f the economy.”

“With the credit agreement being secured by State Treasury the bank may provide funding for PGNiG without violating the applicable concentration limit,” says the report written by the Polish gas company. PGNiG said that it’s continuously monitoring the situation and will take further steps to increase the available financial sources.

On 27 April, Poland, together with Bulgaria, was the first EU country that Russia cut off from gas due to its refusal to pay for the imports in rubles. Poland’s demand for natural gas has increased over the decades, although it plays a relatively small role in the country’s energy mix. Poland is a small producer of natural gas with domestic production stable at around 4 bcm per year, as of 2021.

The Polish government has recently backed a legislation on gas safety, which would postpone the liberalisation of gas prices for households until the end of 2027 and contingency planning for grid operators to allow for a swift reaction if the energy crisis deteriorates.

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