Ladies, and gentlemen, I would like to welcome you at the Press Conference of PGE Polska Grupa Energetyczna, and that will focus on our results achieved in the second quarter and the first half of the year. We will have Lechosław Rojewski, Vice President of the Management Board of Finance, Director of Finance, Piotr Sudoł, and Director of Investor Relations Department, Filip Osadczuk. I would also like to welcome representatives of the media, who honors us with their presence, the analysts, and anyone who is following us online. My name is Konrad Mróz, and I'm the head of External Communications department. In a moment, I will hand over to Lechosław Rojewski. Let me just remind you that after the presentation, we will have a Q&A session. Mr. President, the floor is yours.
Thank you very much.
Once again, a very warm welcome to this conference. And before I move on to my presentation of our financial results, I would like to say a few words by way of introduction regarding some issues that have been raised in the form of questions sent to us, and I mean, mainly questions regarding our strategy. In general, I would like to tell you that the strategy was revoked in accordance with the resolution adopted by the management board and the supervisory board, and it is a final and binding decision as of now. This is the statement as it was published in the press. We will not comment on it, and I think it should be enough. We continue to work based on our strategy of 2020. We are in progress of implementing energy transformation based on that strategy.
Above all, we are developing a very extensive investment program. Our activities are in line with what was described in this strategy. As regard the second issue on which we receive questions, namely, setting off coal assets to the National Agency for Energy Security, we are consistent in supporting the setting off of those assets. We are prepared to do so. We have all... Well, practically, on our side, all conditions have been fulfilled, and we are waiting until the legislative process is completed. The legislative process is beyond our control, and as you well know, the blocking of the act on guarantees by the Senate resulted in the current situation, in which the probability is very low of this process being completed by the end of the present term of office of the same.
For us, and I suppose that for all energy groups that are involved in this process, we are determined to make sure that the two-year process that preceded all those conditions that needed to be fulfilled, it is of paramount importance to us to complete this project. This is vital for energy security, for energy transformation, and above all, for obtaining funding by investment energy groups. And you know, the approach on the part of financial institutions, especially their attitude to entities that still hold coal assets. Let's move on now to our investment process. PLN 4 billion spent in the first six months of 2023 on capital expenditures, investments. Compared to what I presented to you in previous quarters and compared to what we presented in 2022, this is a significant amount.
I will now briefly talk you through how those progresses and how this progress in individual areas can be presented. I will start with distribution, because that is the segment of great importance among our assets. Above all, we are talking about investment in network infrastructure, which requires obtaining considerable sources of external funding. If this distribution operates in a strong capital group, this distribution can succeed only if it can obtain funds, both on domestic and international market. Only then can it develop. I would like to stress that in the second quarter, in distribution, we spent PLN 1 billion on capital expenditures, PLN 1.8 billion in the first six months of the year. That is three times more than last year.
We are not going to slow down our pace of implementing those activities, and we are not going to decrease our expenditures on those investments. Also, in distribution, we can see a growth in new connections. PLN 747 million in the first six months of the year was spent on that. We are cabling a medium voltage network, 442 km of energy lines were cabled. And additionally, in this distribution segment, we should add about PLN 350 million that we incurred in a new segment. You will see that this new segment of Polska Grupa Energetyczna, that is railway energy, was consolidated in this half year within the whole group results. If we move on to renewable energy sources now, we should focus on three areas.
One is offshore, the other is PVs, and the third, well, PV photovoltaics, and the third area, onshore. That is, winds, inland. As regard offshore, the breakthrough event took place, this quarter. That is, we signed a contract for turbines for Baltica 2, with Siemens Gamesa. It concerns 107. Am I right? Yeah, 107 turbines. We also signed agreements for deliveries of component, components, for foundations. That concerns our, cables. And I should stress that we have already obtained a preliminary, decision on, loan to finance this, the, investment by, European Investment Bank to the tune of EUR 1.4 billion. So, that marks a significant progress in obtaining funding for this investment.
I do not need to remind you that the photovoltaics is developing very intensely, and it continues to increase its capacity in the national energy system. Recently, we have launched installations with a total capacity of 12 MW, and this year we are going to increase our capacity with PV Jeziórko and PV Huszlew. And by the end of 2023, Polska Grupa Energetyczna will have either operational or under construction PV power plants with a total capacity of about 500 MW. In addition to that, ladies and gentlemen, we continue construction of green energy storage. Storage warehouse for green energy will be this power plant in the Młoty, with a capacity of 1,000 MW. We have a feasibility study for this project.
We are in talks with the local community, and we want to prepare this local community, while at the same time pointing out, the added value of, building this power plant. We are also in talks with a national, environment protection fund regarding co-funding of this particular investment. In addition to the constructions, we are also, involved in modernization projects that, you know, wear and tear is a normal process, and individual, machines and power plants require some modernization. Now, this is Porąbka-Żar, and, Żarnowiec. As for onshore, just, one, piece of information. Recently, we have bought a wind farm with a capacity of almost 125 MW in Waliszewo, and that means that now the total capacity of wind farms, in Polska Grupa Energetyczna, reached 800 MW.
A major component of our operations over the past few months is something that would help us build stability of electricity supply for Polish people, and this is the joint venture with ZE PAK. This company is supposed to build the power plant, nuclear power plant in Konin. Here, we have already filed the application for the decision to build this nuclear power plant. We have 90 days, and we are waiting for the decision to be issued, but it's not that we are idle. We are actually working on other applications, environmental permits, and we continue to talk to our Korean partners. KHNP is our partner for this project, which is about feasibility study and arranging financing for the project.
The next segment of our operations that has been growing at the fast rate is heating. Here, we have nine investment projects ongoing, and let me briefly explain how these projects are going. In Q2, we started to build the peak reserve heating power plant in Gorzów Wielkopolski, and also the cogeneration plant in Bydgoszcz and Gorzów Wielkopolski. At the same time, we have also completed the CCGT project in Kielce, 160 MW, and a low-emission gas heating block in Bydgoszcz of 40 MW. Now, in terms of Czechowice, here, we've got a project, newly built, which is Czechowice Power and Heat Plant number two, and under this project, we launched four low-emission boilers, peak and reserve boilers, and we had a first offtake of heat.
In Gdańsk, we have actually announced the development of the large-scale heat pump and heat batteries, and we are also optimizing the operation of the electrode boilers. There is one more project that is about to be completed, and this is gas and steam plant in Gryfino. This is where we are going to have ramp up very soon, and most likely by the end of April 2024, we should be able to start the operation of this unit. So this is a brief account of all the investment projects that are going on under the Polish operations of the PGE.
Now, let me briefly refer to the developments of the national power system and what the situation was like during Q2 2023, and what performance we were able to show across four segments of our operations. I will also refer to EBITDA and to our debt and the outlook for the future. Let me briefly start with the overall market situation at capacity and power markets. In Q2 2023, we noted, as in the past, a continuous decline in the generation of electricity in Poland. Year on a year-to-year basis, we were down by 12%, which means that we started at 42 TWh. That was the volume in Q2 2022, and we were down to 37 TWh in Q2 2023. That was caused by a number of things.
First of all, we had the highest electricity price in the region, Poland and Hungary alike, and therefore, we continue to be the importer of electricity. In Q2, the import of electricity was 1.7 TWh. Now, the second contributing factor was the declining trend in the local consumption of electricity. And again, on a year-to-year basis, we are down by 6%, which means that we went down from 42 TWh to 39 TWh, which may be explained by, most likely, by the greater efficiency of the consumption. On the other hand, the declining generation is mostly about the decline in lignite and hard coal generation. What might be surprising is the fact that the wind power has also declined, and this is because of the weather. So on a year-to-year basis, the wind power generation was down by 8%.
We are not surprised to see increased generation in photovoltaic farms. As we know, the weather was very conducive, and at the same time, we have more and more PV farms from year to year. When we compare ourselves to Q2 2022, we see that there were more 4 GW of generation by PV farms. So we do have more volume, and we had a conducive weather to increase generation from PV sources. And the third contributing factor was the gas units and their increased generation. The main driver for that was the declining price.
As you know, as a result of the shock triggered by the war that erupted last year, the natural gas prices were approximately PLN 475 per MWh in Q2 2022, but now the price is approximately PLN 175 per MWh. Now let's look back at July, so we are beyond the first half of the year, and I may say that in July, both the generation and consumption of electricity were going down. Now, when we refer to the electricity prices, again, when we take a look at the curves on this slide, we see that we are in the declining trend. The future contracts for 2024 had their prices dropped to PLN 630 per MWh.
I need to say that, when we look at it from quarter to quarter, we see that prices go down. In Q1, the price was PLN 700 per MWh. The declining prices are driven by declining commodity prices, namely natural gas and hard coal. As far as Q2 2023 is concerned, and when we talk about hard coal prices, we can tell that ARA quoting went down to $122 per ton, or $120 per ton, while in 2022, at the same time, we were at $380 per ton. We were also observing the declining natural gas prices from EUR 80 per MWh, down to EUR 50 per MWh. We cannot say the same thing about CO2, because here we see a continuous decrease or increase.
But if we look at long-term forecasts, we can say that we are on an upward trend in terms of CO2, because the CO2 level is now 95 EUR per a CO2 unit. Now, we will move on directly to Polska Grupa Energetyczna and our four segments. As in the national electricity system, also in the second quarter, in generation units of the Polska Grupa Energetyczna, we saw a decrease in production by 18%, that is 2.7 TWh, compared to the same period, 2022. And here, we can see generally a decrease on lignite by 30% year-on-year, in connection with lower utilization by the operator of the transmission system for those units. We noted, however, an increase in production gas, up by 69%, obviously, due to lower prices.
In second quarter, but it hadn't been for the merger with the PKP Energetyka railway energy, we had a 7% increase, so with distributed energy, 0.6 TWh, and higher consumption of electricity by households, that is in the G tariff. On the other hand, we see a decrease in energy that is distributed in other tariffs, A, B, and CR, and the decrease is by the total of 8%.
... As regards sales to end users, we see also the effect of consolidation with railway energy increased by 2%, 0.2 TWh. Without railway, the volume would be lower compared with the same period last year by about 6%. As regards heat, sales of heat dropped also by 2%, owing to the temperatures that were higher than in the same period last year. Now, we move on to EBITDA. EBITDA for the second quarter, reported EBITDA, let me reiterate this, in the second quarter amounted to PLN 2.445 billion, and was lower by PLN 1.332 billion, compared to the same quarter, 2022. This is obviously in the reported EBITDA related to recultivation provision.
Discount rates changed, and as a result, our 2022 outcomes increased because PLN 1.1 billion provisions were dissolved, and this year we had to establish a provision for about PLN 330 million. As regards other factors that affect EBITDA, we see an increase in margin on electricity production and heat, PLN 3.3 billion, and that is linked to the fact that prices of electricity were higher than in the same period last year by PLN 334 per MWh . The drivers of the decrease in the margin include per unit cost of CO2. Those per unit cost of CO2 were affected by the increase in the price by PLN 133 per ton, higher per unit cost of coal by PLN 19 per GJ.
Let me remind you that in our resources, we had and used coal that was imported and that was carried, the raw material that we kept still from the previous year. Therefore, the cost of this raw material was higher. The next element is the greater volume of natural gas consumption by 2.3 PJ. I would also like to say that this year we have the maximum level of prices. For households, that is PLN 693 . For small enterprises and other units, PLN 785 . In August, that changed, and we are at the level of PLN 693 again.
Therefore, the write-off for the fund of difference in prices, the value of this is PLN 1.4 billion, of which the great majority, PLN 1.2 billion, is related to conventional energy. We also recorded a higher result on sales of electricity to end users by over PLN 118 million. This is above all related to the lower cost of portfolio offsetting. In the second quarter, we also saw a higher margin on distribution service by about PLN 310 million. This is related obviously to the higher rate in the tariff for 2023. The new segment margin on railway energy, PLN 328 million.
In the second quarter, we also recorded higher revenues, not only from electricity, but also from sale of services, power market, or regulatory systemic services, and that amounted to almost PLN 551 million. We also incurred personnel costs. That is a very important element that drives EBITDA, PLN 317 million, and this was, in general, the consequence of collective agreements that we signed.
... So recurring EBITDA in the second quarter 2023 increased by PLN 1,243 million. So net profit for shareholders of the holding company PLN 352 million. Capital expenditures in the second quarter, I will not talk you through the details, because I gave you an overview of our investment at the very beginning, and that relates to those CapEx numbers. Let me just signal that MUZA program is still underway, and we are still developing our traction stations. We're increasing throughput capacity, and we're electrifying railway lines. These are very important elements of our investment activities, and they require capital expenditures. So second quarter 2022 to 2023 shows a growth by 123%.
So I think, this is a significant growth, so we cannot say that there are any shifts in or reallocations in our CapEx. But this also means that at the end of the second quarter, we have debt of 7.63, 0.84 debt ratio. And if we look at the future costs related to CO2 here, debt will be much higher, PLN 19.3 billion, and debt-to-EBITDA ratio will then be at 2.0-11. The main elements driving net debt at the end of the second quarter, 2023, it, well, first of all, recurring EBITDA at Q2 at 2.9. Now, the acquisition of railway segment, it's PLN 1.5 billion zlotys.
So this is the acquisition price, PLN 1.9 billion, after adjustment, accounting for PLN 0.4 billion, which was cashed in, in this business. Then we took over the debt of railway power, PLN 5 billion. And here, I need to explain that at the end of August, the debt was completely taken over by us, which means that, as I say, that we have actually acquired from PKP Energetyka has already been paid off. So provision for CO2, PLN 5.3 billion for Q2, and the settlement of CO2 in Q2 2023 was PLN 1.2 billion. This payment was made in April, and that settlement was for the prior year, and then the actual CapEx at PLN 2.4 billion. So that explains how come that we landed at such a debt figure.
Now, at the end of this presentation, let me say a few words about the future. Like, what is our outlook for the four segments of our business, the way we see that until 2023? We believe that the conventional power sector will show growth, because our projections for Q2 2023 was higher, and that was mostly driven by capacity market and regulatory services revenues that were generated from that. And at the same time, the anticipated time when we are going to switch off consolidated EBITDA was actually deferred. Now, we will definitely see the impact of the new law on extraordinary measures that will be in place to curb the electricity prices. When it comes to the conventional power generation and to the heat generation, we expect that the cost of CO2 will go up.
Hard coal, sorry, lignite and other fuels are likely to come up in price, too, and that is true for conventional power generation and for heat generation, likewise. We believe that electricity import is not going to be limited in any way, so it is imported electricity will be, will continue to flow in. Now, looking at renewable energy, here we see the price limits, but first of all, this price limits may actually translate into lower generation volumes and heat generation. In 2021, 2022, the tariff had the cost transfer included, and therefore, the reference prices that were published and officially announced enabled the heating sector to recover the costs that they had to incur. Now, for the distribution, WACC plays a key role, and I continue to uphold my opinion that I shared during the last conference.
I believe that WACC will be at the higher level. That should be facilitated by the program that is implemented in the distribution sector. And, and the main driver will be the volume of distributed electricity. So perhaps, my presentation was somewhat long. Thank you for bearing with me, and now I encourage you to ask questions.
Thank you. And as our President said, now it's time for Q&A. So if I may, I will start with the questions that we got by email, and later on, we will give you the floor. So the first question is how PGE Group is prepared for operating without a National Agency for Energy Security?
Well, we believe that this process will come to the completion, no matter whether it will be this government or another government that will be debating that, or parliament, actually. So I think that as of today, there is no other alternative option that would help us keep sustainable supply of electricity for Polish consumers. We are prepared for the operations in the new model, in the new structure, and we are also prepared to operate if this process is not going to materialize itself. We are in business today, and I believe that tomorrow we will be still in business. We are preparing budgets for 2024, and we thinking that this agency will be in our structure. There are two options, two alternatives, but we are either with them or without.
Okay, another question that is related. Since there is no law that would support and actually enact this agency before the end of this parliamentary term, does it mean that the process has failed?
Well, I don't want to repeat myself, but this process was taking two years, and all the power and electricity groups and Ministry of Treasury and all the advisors were engaged. It was not an easy process, and eventually it was, in a sense, completed with the term sheet signed, although the term sheet was not binding. In my opinion, this process really helped us divest the coal and lignite assets into the National Agency for Energy Security. But to have financing arranged for that, we need to have a legislation that would provide the guarantees. Without these underlying law, financial institutions and also the institutions that help us cover CO2 limits, they will not make a decision that would help us operate this agency.
Okay, another question is longer. What is the likely impact of the regulation of the Ministry of Climate and Environment by reducing the price of electricity by 12%? When are you going to recognize that, and are you going to request any compensation for the fact that you are going to have reduced receivables?
Let me ask my colleague to take this question. Well, as of today, we are not able to come up with the accurate numbers that will show the impact on the financial performance of the group. And I may just share the contributors. In PGE, we have 5 million customers, and 4.9 million out of them are households, and households are going the beneficiaries of this new regulation. As you know, this is PLN 125 per each customer.
To be eligible for this customer, for this bonus, each customer has to meet one of six criteria. For instance, consent for the e-invoice or electronic contact, or to be a prosumer. We know that at least 50% of our consumers meet the criteria, but as required by the regulation, we started the outreach to inform each customer and each consumer about the possibility to get this special bonus, provided that they meet the criteria prescribed by the regulation. Now-
... We are certainly going to show that in our financial numbers by the end of 2023, because according to the regulation, this bonus should be granted in the invoice for December at the latest. However, since this is the tariff G, the invoicing will continue until June 2024, but all the impact will be actually absorbed in the numbers for 2023. And in terms of the compensations, yes, we will try to request that. However, first, we need to wait for the legislation that would support this process.
One more question from among those that were sent online. What was the estimated net debt PGE Group without the coal assets at the end of June 2023?
Ladies, and gentlemen, in general, our group gets central funding, that is through cash pooling mechanism in short term, while in medium-term or in long term, we grant loans. As I showed in the presentation, over 19 billion represent net debt, of which mainly CO2. CO2 is at PLN 12 billion, including only for conventional energy sector, PLN 10.4 billion.
Thank you very much. Are there any questions from those present in the room? The microphone doesn't function. We cannot hear the question being asked. The microphone doesn't work, so the translators cannot hear the question. I will ask all questions at once. My question is about higher revenues from regulatory systemic services. The growth here is very significant. We read that it is a reallocation between PGE branches.
Could you elaborate on this topic, please, gentlemen? The second question regards coal imports. We have 3 million tons of coal that were imported by Energetyka Zawodowa by the end of June. My question is about this trend. Is this trend going to continue, or do you want to have a reduction in imports? Imported coal is now cheaper than domestic coal, so that explains my question. The third question is about the price that was proposed by the State Treasury. You say that it is going to generate a loss of about PLN 9 million or even PLN 10 million . Does it mean it is going to be a real loss of PLN 10 million for which the State Treasury should pay?
Okay. Let me start with revenues from reallocation of power.
That was related to the low workload on coal units. That pushed us to relocate generation from those higher units to the ones that had lower workload. We expect that the amount is going to be now lower as a result. Why is it going to be lower?
Well, it's going to be lower because there will be lower utilization or the consumption of renewable energy sources. Well, but consumption of renewable energy sources did not change so much from past year. Oh, yes, it did change. In the presentation, I showed that unfortunately, in the production, we saw a decrease by 8% from wind farms, so it does mean that there was a change.
Okay, but why reallocation from generation? What is the reason?
The demand of the national energy system. The operator of the system, of the distribution system, chooses what is going to be used. Could you say what exactly were those reallocations, from which units to which units? I do not have exact information on that, or maybe you, colleagues. I think we can see that in our production, the basis that is being reduced by the operator is lignite, and that drives revenues from reallocation. If we look at that purely in financial terms, we should see a decrease in our margin on production of lignite. And there is a 30% decrease.
Okay, thank you very much. Now, as regards coal, I must tell you that if we talk about the 3 million tons of coal that was imported... in 6 months.
As of today, we do not expect any increase here, because we have coal from Polish mines, but it is more expensive. You do not know whether it is more expensive, because as of today, we are in talks with Polska Grupa Energetyczna, and we have not agreed any price yet. So, we cannot talk about any price, and we cannot talk about it correlating in any way to the price of imported coal. Are you talking about price for the second half of this year or 2024? And as for valuation of the State Treasury, Director Sudol, could you restate your question? Are we talking about arithmetics? 10- 1= 9. No, we are, mm, talking about the value.
I understand that the loss on this next year is nothing pleasant. So to avoid this loss, the State Treasury would have to contribute PLN 10 billion. Mm, balance sheet value is exactly as you say, PLN 10 billion, but in order to avoid booking accounting a loss, the price would have to amount to PLN 10 million. Yes, but please, no, you have to look at it from a somewhat different perspective, because if we refer to the valuation that was presented, because obviously we also have our own valuations and these show... I cannot give you an exact number, but they do show a certain value.
Anyway, profitability of our energy units as of today, and profitability of energy units in the long term of operation of the National Agency for Energy Security will be completely different. Please notice that there is some wear and tear of those assets. On the other hand, please remember the benefits we are going to reap when we set off those assets and move them to the National Agency for Energy Security. There will be a great benefit in the cost of funding, value, volume, international markets, insurance, and so on and so forth. So these are benefits that add value to the functioning of Polska Grupa Energetyczna.
I think it is a convincing approach, because if you refer only to the dry numbers that you can see in the financial statement, you will only see the negative side of it. Please bear in mind also the positive side, because it is much more beneficial than the negative is negative.
Thank you very much. Any other questions?
Good afternoon, Irek Chojnacki, Wirtualny Nowy Przemysł. I have a few questions. The first is about the plans of the group in connection with the upcoming auctions of renewable energy sources and the main auction of the power market. Are you planning to participate in this year's auction, main auction of the power market? And if so, with what project or projects? The next point regards coal. Could you specify the proportions of lignite supplies?
What was the proportion of imports, what was the proportion of domestic coal? And as regards domestic coal, do you regularly receive the volumes that you had ordered, or are there any tensions in the context of the situation that you mentioned about generation levels? Because I imagine there might be some delays in receiving the delivery. And the third question is about offshore. The second stage, where the group has received location decisions, if I may call them so. Can we say these are final? Are they not being undermined? Are there no requests for canceling these or court procedures? And if you have the go-ahead, and maybe you have already started talks with industry investors about a possible partnership in the project. I know it is still a long way ahead, but you did not exclude this sort of scenario.
Okay. So perhaps, I will ask my colleague to answer the question about the actions. Well, let's remember that by principle, this is a competitive market, so we are not really going to-
... share the information, how we are going to approach that, in both cases. There is a follow-up question or comment, but without a microphone. But nevertheless, I believe that at this point, we simply refrain from comments. Now, speaking of the coal. Overall, we are working on the contracts with local suppliers, and these contracts are performed on a regular basis. Recently, we purchased 1.3 million tons more coal than planned. This is still from 2022 deliveries that have not been completed, because some deliveries scheduled for 2022 were not completed. So now we operate mostly on the basis of the local coal, and as I mentioned before, in the future, we intend to work with the local coal too.
Now, what we showed here is like the really residual section of coal that was left from the imports, and it was used for the electricity generation, and therefore, the cost per unit, per gigajoule was going up. Now, to answer your question about the offshore power farms that we have that have the decisions issued are in the pipeline. We are getting prepared for this project. We are looking for partners, and I need to say that our offshore departments continue to hold discussions with prospective investors, and there are many of them. As of today, we've had 23 meetings with investors. What will be the final decision? Who's going to get invited? Well, you know, probably from the Tauron conference, that one of the projects will be done together with Tauron.
They have 43% stake in that project. And who's going to do with us other projects? Well, time will tell.
Thank you. And we have another question from the room. We just need a microphone so that everyone can hear it.
Konrad Krasucki, Bloomberg. I just want to revisit this unfortunate question of National Agency for Energy Security. Well, the president said that the process will have to be revisited because there is no other alternative to secure sustainability of electricity supply. But you said that we are also prepared for another alternative, where there is not going to be the energy security agency in place. So it will be difficult to continue the investing in the power sector without the agency in place.
And what happens if the whole parliamentary process is going to drag for another six months, and it will be not clear what would be the environment for your operations? Now, at the same time, the opposition has a different concept for the power sector. They want to divest distribution companies from the group, and they want to actually revert the whole process. Do you believe that under this scenario, it is actually possible to finance the transformation process, but instead of the National Agency for Energy Security, we would have a completely different concept in place? And then final question seems to be kind of off topic, but last vacation, the parliament has passed the law, the new law on spatial planning.
According to that new law, by the end of 2025, all the municipalities need to have general land plans. And if they don't finalize their plans by the end of 2025, then you will not be able to get the permit for PV or any other type of energy farm, wind farm or whatever. So do you see any risk related to that, that suddenly investors will actually try to get all this distribution that is still free, and we will end up with a complete chaos during the next two years? So what is your outlook on that from the dual perspective, distributor and the generator?
Okay, so let me first speak about the National Agency. Actually, you answered your own question, because I've already said that today, we have to look at it in the following way. The Senate has actually blocked the law, so it is not possible that the parliament will reconvene and will pass the law on the guarantees. So the process is going to be actually prolonged, and therefore, we need to have dual plans. Until we don't have it in place, our conventional power generation continues to be part of our group, of the PGE. And therefore, we have to plan for these operations within our group until the moment when these assets are divested. But let me emphasize that we do not see that it's possible that the National Agency for Energy Security is not going to establish.
The plan that you referred to, the opposition plan, in my opinion, is not realistic, because the plan to actually bring all the core assets into one agency that is National Agency for Energy Security, is a highly realistic plan, and this plan is likely to be feasible in the future, both financially and also in terms of actually securing electricity supplies for Polish consumers. Because how can you imagine the scenario where individual coal units will be divested from power groups, and how they are going to be placed on the electricity market? What kind of formula you see for that? And on top of it, the distribution.
If the distribution is not part of the power groups, then the financial institutions will not see us as those who hold the core assets that they actually take as a basis for providing financing. On top of it, if you actually leave heat and distribution and renewables, then, you know, how are you going to make these power conglomerate sustainable financially? So the opposition's plan, in the long run, goes towards the privatization of the entire sector, and that should be clearly spelled out. We see that the opposition wants to actually butcher the power sector in such a way that once it is chopped, it can be acquired by international conglomerates or even physical natural persons and other individuals or entities.
Then it will be possible to actually have all other groups instead of those that come from our public sector. The third question was about what?
The spatial planning.
So do you see any risk related to the new law on spatial planning?
I think that when it comes to the spatial planning, the local governments will have a positive approach to that, because for them, this is also a prospect for development. They can actually align everything to make sure that such projects as ours are deliverable. I think that from that perspective, cable pooling also matters. In other words, using all our capacity that we have in our onshore wind power. If we can actually develop PV farms in the same local areas, then we need to have the local land development plans revised.
This is also an opportunity for us.
Okay, thank you very much, then, for the questions. Thank you for the answers provided by the management board and directors. Thank you for being at the conference. Have a nice day.