“Grupa Azoty Polyolefins will thoroughly analyze the proposed amendments to the EPC Agreement submitted by the General Contractor. In this process, we are bound by the relevant procedures outlined in the EPC Agreement and other contracts between the Company and the General Contractor. We must consider that we are in the midst of intense negotiations, and recently informed the General Contractor that we do not find grounds to accept the previous claims,” explained Wojciech Blew, Acting President of the Management Board of Grupa Azoty Polyolefins.

The first amendment proposal, submitted on September 6, 2024, concerns extending the completion date of the Polimery Police project by an additional 43 days and increasing the General Contractor’s compensation by EUR 9,609,408.94. According to the contractor, the basis for requesting the extension and additional compensation stems from coordination issues affecting specific parts of the project.

The second proposal seeks to increase the contractor’s compensation by EUR 116,220,264 citing increased costs incurred due to actions taken by the Company’s personnel during the project startup phase.

Under the EPC contract, the General Contractor is comprehensively responsible for executing the project. Completion of the project requires achieving and maintaining the Guaranteed Parameters outlined in licensing agreements for the propylene (PDH) and polypropylene (PP) production installations.

Propylene and polypropylene production and capacity increases are progressing according to the project schedule. In May of this year, Grupa Azoty Polyolefins reached the milestone of producing its 100,000th ton of polypropylene. The Company is currently producing 800-900 tons of polypropylene per day. Logistic processes are ongoing, with the packaging and distribution of the product under the Gryfilen® brand. The plant has successfully transitioned between producing different types of polypropylene, thereby expanding its product portfolio. Sales of polypropylene produced at the factory are being conducted regularly, based on agreements with distributors as well as through direct sales. Production capacity is being gradually increased to the project’s target values of 429,000 tons of propylene per year and 437,000 tons of polypropylene per year.

On July 31, 2024, Grupa Azoty Polyolefins S.A. signed bilateral Conditional Temporary Acceptance Protocols with the General Contractor for the Polypropylene Installation and the Storage & Handling Terminal sub-projects. The Conditional Temporary Acceptance procedure was implemented as part of the parties’ efforts under the EPC Agreement to expedite the handover of the Polimery Police project for commercial operation.

Negotiations are currently underway for an annex to the EPC Agreement, in which the parties will finalize the approval of the Integrity Test, establish the settlement terms for the Polimery Police Project, and define their rights and obligations in connection with the completion of the construction phase of the project.