INTEGRATED ESG
REPORT 2020

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PL

3.2 Operating expenses

Accounting policies

Cost of gas

This item comprises the cost of gas purchased on gas exchanges and from trading partners. The cost of purchased gas includes a reasonable portion of costs of system and transaction charges, costs of domestically produced gas, as well as costs of nitrogen rejection and regasification. For further information on accounting for those items, see Note 6.2.1.

Raw materials and consumables used

This item comprises the costs of raw materials and consumables used in principal business activities, in particular fuels for electricity and heat generation. Another material item in this cost group is the cost of electricity for trading.

Świadczenia pracownicze

Employee benefits expense includes in particular salaries, wages, social security contributions and cost of future benefits. For details of employee benefits expense, see Note 6.3.1.

Transmission and distribution services

In connection with its transmission and distribution services, the Group incurs costs of services it contracts from third parties (this does not apply to costs related to comprehensive agreements, in which the Group acts as an agent (described in Note 3.1.). The transmission and distribution system operators charge the Group for the cost of transmission services, i.e. the cost of transmission of gas fuel via the network of pipelines, the cost of heat transmission and the cost of electricity distribution.

Other services

This item comprises cost of third-party services, other than transmission services, required for the core activities of the Group companies. These include in particular:

  • Regasification services, consisting in converting liquefied natural gas to the gaseous form by heating liquefied gas;
  • Repair and construction services and services related to repairs of production machinery and equipment, in particular equipment associated with heat generation;
  • Mineral resources production services related to hydrocarbon production;
  • Rental services.

Taxes and charges

This item includes in particular property tax expense and royalties for hydrocarbon production.

Recognition and reversal of impairment losses on property, plant and equipment and intangible assets

For details of impairment of non-financial assets, see Note 6.1.3.

Amortyzacja

This item comprises depreciation/amortisation expense on property, plant and equipment, right-of-use assets and intangible assets, calculated at the adopted depreciation/amortisation rates (for details, see Note 6.1.1. i 6.1.2.).

XLS

Note 2020 2019
Cost of gas (19,808) (26,686)
Gas fuel (19,808) (26,687)
Cost of transactions hedging gas prices – 1
Effect of the annex executed with PAO Gazprom/OOO Gazprom Export on cost of gas in 2014–2019 4,915 –
Other raw materials and consumables used (3,224) (2,977)
Fuels for electricity and heat generation (909) (958)
Electricity for trading purposes (1,810) (1,483)
Other raw materials and consumables used (505) (536)
Employee benefits expense (3,381) (3,168)
Salaries and wages (2,463) (2,344)
Social security contributions (449) (519)
Long-term employee benefits (134) (95)
Other employee benefits expense (335) (210)
Transmission services (1,048) (1,053)
Other services (1,888) (1,828)
Regasification services (388) (370)
Repair and construction services (265) (277)
Mineral resources production services (190) (141)
Rental services (95) (86)
Other services (950) (954)
Taxes and charges (911) (782)
Recognition and reversal of impairment losses on property, plant and equipment and intangible assets Note 2.2. (1,786) (659)
Cost of exploration and evaluation assets written-off (198) (259)
Impairment losses on property, plant and equipment (1,577) (388)
Impairment losses on intangible assets (11) (12)
Depreciation and amortisation Note 2.2. (3,424) (3,056)
Total (35,470) (40,209)

 

Effect of annex executed with PAO Gazprom/OOO Gazprom Export on cost of gas in 2014–2019

In connection with the performance of the Award and the Annex to the Yamal Contract, in June 2020 the Company received correction invoices for gas supplies. As a result, the amount of operating expenses was reduced by PLN 5,689m, including:

  • PLN 4,915m relating to costs of gas in 2014-2019 – presented as the ‘Effect of annex executed with PAO Gazprom/OOO Gazprom Export on cost of gas in 2014–2019’ in the consolidated statement of profit or loss;
  • PLN 774m relating to costs of gas in 2020 – presented as ‘Cost of gas’ in the consolidated statement of profit or loss.

For more information, see the Directors’ Report on the operations of PGNiG S.A. and the PGNiG Group in 2020.

Impact of the COVID-19 pandemic on the PGNiG Group’s operating expenses

In connection with the COVID-19 pandemic, ongoing since the first quarter of 2020, the PGNiG Group incurred the following operating expenses:

  • expenses on the purchase of personal protective equipment and other items, in the amount of PLN 15m, recognised under Employee benefits;
  • expenses of PLN 20m incurred on donations made by the PGNiG Group to help combat the COVID-19 pandemic, recognised under Other income and expenses. (Note 3.3.).
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3.1 Revenue
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3.3 Other income and expenses

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