20.1 Provision for land rehabilitation
Provision for the rehabilitation of mine workings
After the termination of mining operations the areas of the Group’s opencast lignite mines will undergo the process of land . According to the current plans, costs will be incurred in the years 2032-2066 in the case of the Bełchatów Lignite Mine Branch and in the years 2045-2085 in the case of the Turów Lignite Mine Branch.
The Group creates provisions for land costs. The amount of the provision presented in the financial statements includes also the value of the Mining Plant Liquidation Plan established in accordance with the Geology and Mining Law Act. As at 31 December 2023 the value of the provision was PLN 5,694 million (as at 31 December 2022 – PLN 3,606 million).
Furthermore, the Group adjusted the discount rates used in assessing the present value of future expenditure on the of the workings in both opencast lignite mines. These rates are as follows:
- for expenditure expected to be incurred within 15 years from the reporting date – 5.1% (7.0% as at 31 December 2022),
- for expenditure expected to be incurred within 25 years from the reporting date – 5.5% (7.03% as at 31 December 2022),
- for expenditure expected to be incurred later than 25 years from the reporting date – 5.67%, PGE’s extrapolation, in accordance with the adopted methodology (7.08% as at 31 December 2022).
- In addition, the Group revised its inflation forecasts.
The update of the above assumptions resulted in an increase in the provision by PLN 1,733 million. The current lignite extraction and discount reversal resulted in an increase in the value of the provision by PLN 355 million. In consequence, the provision for the of mine workings rose in the current reporting period by PLN 2,088 million. This change was recognised as follows:
- PLN 1,296 million – in correspondence with assets (as an increase in property, plant and equipment – PLN 1,282 million and an increase in the balance of MPLF deposits – PLN 14 million),
- PLN 792 million – in correspondence with the current financial result.
The estimated changes in the land provision due to a change in the discount rate:
| Value in statement | Discount rate | ||
| -1 p.p. | +1 p.p. | ||
| Provision for the rehabilitation of mine workings | 5,694 | 1,497 | (1,153) |
Provision for the rehabilitation of the ash disposal sites
The power plants create a provision for the of the furnace waste disposal sites. As at 31 December 2023, the provision amounted to PLN 256 million (PLN 205 million as at the end of the comparative period).
Provision for the rehabilitation of the wind farm sites
The companies that own wind farms create a provision for the of wind farm sites. As at 31 December 2023, the provision amounted to PLN 7 million (PLN 22 million as at 31 December 2022).
Property, plant and equipment liquidation costs
As at the reporting date, the provision amounted to PLN 412 million (PLN 309 million as at the end of the comparative period) and refers to some assets of the Conventional Power Generation and Renewable Power Generation segments.