Dear ladies and gentlemen, welcome to the conference call of PKN Orlen. I will now hand you over to Mr. Konrad Włodarczyk , IR Director. Sir, you may now begin.
Thank you, operator. Good morning, ladies and gentlemen. Welcome to the conference call regarding PKN Orlen long-term strategy until 2040. The presentation that was emailed to you and is available on our website will be delivered by Karol Wolff, Head of Strategy, me, and Michał Perlik, Executive Director for Finance Management. After the presentation, as usual, there will be a Q&A session, so during this session, several directors from PKN Orlen will be ready to take your questions. With no further delay, I hand over to Karol. Karol, the floor is yours.
Thank you, Konrad. Good morning, good afternoon. Today, we're presenting our 2040 strategy. This is a very important moment for the ORLEN Group. We are setting the direction that will shape our company in the coming years. We transform ORLEN Group from downstream oil and gas player into a new multi-energy company, able to compete in the face of great energy transition. We aim to actively manage our business portfolio and build the key pillars, maximizing performance of our existing business lines, developing strategic projects, and investing in the future with reliance on new technologies and business models. In the first section, we describe our aspiration, and we describe our vision for our business in 2040. Let me start with slide number four, where we'll describe the trends that are reshaping our environment. There are many trends that challenge our business.
For the long time, the fuel and energy sector has not faced so many factors that are reshaping the environment around us. The main drivers of the energy transition are new technologies. Growing cost effectiveness of renewables make investment in this segment more profitable. Second aspect are changing customer expectations that require us to deliver increasingly efficient and environmentally friendly products and solutions. Furthermore, the growing public awareness necessitates a mitigation of the impact we exert on the natural environment and external stakeholders. Just as one example, the new regulatory policy is very ambitious for greenhouse gas emission reduction. We know that there is no turning back from the energy transition. ORLEN Group has strengths, capabilities, and extensive experience during the process. We consider it as a great growth opportunity for our company.
Going further, we show our ambitions. ORLEN Group ambition is to become the business leader of sustainable energy transition in CEE region. In 2030, with a presence in more than 10 countries and extended value chains, we want to generate a two and a half fold increase in EBITDA operating profits. By the end of this decade, our renewable energy capacity will increase to 2.5 GW. As a result, we will rank as one of the region's largest producers of clean energy. We aim to become a supplier of integrated solutions to customers. We have considerably expanded our non-fuel offering. We will grow our network both domestically and outside Poland, while deploying new formats beyond service stations. We want our retail network to ultimately compare to over 3,500 service stations. We also want to be open for new mobility with over 1,000 EV fast chargers.
Our operations will be underpinned by sustainable development. We will invest in clean technologies designed to deliver environmental benefits. The ORLEN2030 strategy will put us well on track to achieving our long-term objective of carbon neutrality by 2050. For years now, Orlen has been one of the fastest-growing players on the market, delivering attractive results for its shareholders. We are poised to maintain the momentum with our envisaged transformation as the key route to that end. We are building a multi-energy integrated group based on robust and well-diversified business segments, as well as flexible financial policies. We also aim to share the profits with our shareholders. Starting from next year, we will distribute dividends of PLN 3.5 per share or more. Going on slide number six. We want to sketch, we want to show how we are implementing these changes.
Especially taking into account that in the long run, the processing of crude oil for the need of transport fuels will lose its importance. We must maximize profits from our current core assets and develop strategic segments of the company. They will guide our transformation and the process of building new business areas. How do we want to achieve these goals? We want to actively manage the portfolio of our current and future business activities. By formulating ORLEN2030 strategy, we adopted an approach based on three main strategic fields of play with respective capital allocation. They include maximization of profits and value of the current business segments, which accounts 40% of total CapEx pool. Development of strategic projects for which we allocated about 50% of the capital pool.
Finally, investing in the future, including new business models and new technologies, accounting for up to 10% of the CapEx pool. Going on slide seven. Let me describe to you how the strategic logic defines the key directions of each business area. Firstly, we will aim to maximize profits from our existing business segments. We are realigning our upstream portfolio. We are ramping up the efficiency of our current downstream assets. We are investing in low carbon conventional power generation. We are expanding our fuel retailer network and offer. Secondly, we are entering profits in new promising areas. As said, about half of our investments will be spent on building new promising areas. Renewable and low emission energy sources, as well as modern petrochemicals are of key importance. The latter will be a crucial source of revenues from crude oil processing in the coming years.
We will also develop non-fuel retail as a strategic field of play. Our focus will be on the rollout of new formats for retail customers. As the last third pillar, we will spend approximately 10% of our total CapEx on investments in the future. This will include new mobility, hydrogen, recycling, research and development, as well as digitalization. Investments in this area will provide us with a basis for future product health and development beyond 2030. Page number eight. We want to underline that our strategy is underpinned by sustainable development. This is why we directly spent over PLN 30 billion, almost EUR 7 billion. That is almost one-third of our entire development CapEx budget to advance this goal. Sustainable development is not only about reducing emissions. It's also about harnessing renewable energy, expanding biofuel capacities, and rolling out alternative fuels.
In these areas, we have already built strong capabilities that we are set on developing further. We realize that sustainable development is not only our duty, but can also be a source of healthy returns. Page number nine. In this context, we reaffirm our commitment to reduce emissions with a target of net zero carbon by 2050. Two months ago, in September this year, Orlen, as the first oil and gas fuel company in Central Europe, announced its ambition to become carbon neutral. Our 2030 strategy is the main stepping stone towards this target. In the coming decade, we will reduce CO2 emissions from our existing refining and petrochemical assets by 20%, and from power generation by 33%. We have developed clear actions for our decarbonization strategy and pipeline of calibrated initiatives. We have six investment projects designed to reduce carbon emissions.
Finally, on slide number 10, we share our financial effects of this strategy. ORLEN2030 long-term strategy should deliver significant value for our shareholders. The implementation of our strategic objectives will contribute to more than 2.5 x increase in EBITDA operating A significant part of it, around PLN 4 billion, will be the result of conducted and finalized acquisitions of Energa Group and LOTOS Group. However, new investments based on long-term technology parallel, consumer and environmental trends will be of key importance for the development of Orlen. They should add additional PLN 30 billion to our operating profits. Thanks to a sustainable business model, ORLEN2030 will generate approximately PLN 26 billion in EBITDA in 2030. We perceive this amount not as a promise, but as an obligation towards our shareholders. Going to the next section, we wanted to share some thoughts about our growth so far.
On slide number 12, we wanted to compare our results with the median for most important competitors. Over the last decade, Orlen has been one of the fastest-growing players in oil and gas, more than doubling its EBITDA within this period. Furthermore, in the face of pandemic, our company turned out to be more resilient than the competitors. We want to maintain this upward trend and resilience. The key to achieving this objective is transformation. Slide number 13. Orlen is changing because it has strong grounds for it. We have consistently implemented our previous strategy to generate the financial results which allow us to invest in the future. We have delivered on our key operational and financial targets declared two years ago in our strategy update from 2018. Operating profits and CapEx investments are in line with our assumptions. We maintain financial parameters on safe and stable ground.
Currently, we operate in a difficult and unstable environment, but we have solid financial foundations for further growth. Slide number 14, we consistently implemented our strategic objectives and conducted development investments. We have taken a number of actions to prepare Orlen for the changes that are happening in front us. We acquired Energa Group with a significant package of renewable energy assets. We have gained access to extensive distribution network and to large number of individual customers. We have launched and are determined to follow through with the process of acquiring the controlling interest of LOTOS Group. We have already secured conditional clearance from the European Commission, and we are at the advanced stage of implementing the remedies. We have also initiated the process of acquiring PGNiG, Polish gas distributor.
We have made very good progress in the preparation for our largest power generation capacity, the construction of offshore wind farms at the Baltic Sea. We are developing our retail business. We are also exploring new solutions to solidify Orlen's position as a leader in the retail area. The acquisition of Ruch, Poland's countrywide retail chain, will be a key success factor here, expanding our retail presence beyond the service station network, optimizing the cost of logistics, and allowing us to extend the range of products and services for our customers. Slide number 15. As a result of this action, Orlen has built a solid, well-balanced base for further growth. We are a leading refining player in the region with six refineries processing over 40 million tons of oil a year. Our petrochemical assets are producing 30 products, delivering to our customers from over 60 countries.
We have also 3.2 GW installed generation capacity, of which 0.5 GW are renewables, and 1.1 are gas-fired facilities. Orlen operates over 2,800 service stations across five countries, serving over 50 million customers. Finally, we possess approximately 200 million barrels of proven reserves of hydrocarbons. Our environment is changing, and the world in which we operate undergoes fundamental changes. On slide number 17, we show some of them which have the most significant impact on the energy sector. First, we can observe slowing growth of crude oil demand, driven by increasing energy efficiency, development of alternative fuels, and higher fuel components. Furthermore, factors such as COVID-19 pandemic caused disturbances in oil and gas market. On the other hand, new energy sources become more and more competitive due to growing scale and technological developments. They are additionally driven by increasing environmental awareness and new regulations focused on energy transition.
Finally, we witness evolving customer expectations, which includes preferences for digital distribution channels and tailored offer. Slide number 18. These fundamental changes and the implications can be particularly visible in the evolution of energy mix. International Energy Agency forecasts the upcoming year demand for the energy generated by renewable energy sources will be growing the fastest, more than 3x faster than for any other source. Slide number 19. The market trends that arise globally are especially important for Eastern Europe. Eastern Europe countries follow the same market developments as older member states of the European Union, a few years later. This provides both challenges and opportunities. As late adapters, the pace of transition in the CE region lags behind Western Europe. However, late adoption provides opportunities for market expansion under more efficient, innovative, and cost-effective technologies.
Orlen Group, being aware of this trend, is looking to utilize it and builds its strategy based on this [new]. On slide 20, we show these opportunities in new business ideas that offer ORLEN Group attractive growth prospects. In view of the direction taken by the energy transition, renewable energy, in particular, wind and solar power, is now most attractive business opportunities. For gas generation being a perfect complement to the future energy mix, provides additional attractive business area here. Finally, there are also many ideas that will become key for our future development and key ideas of competition among energy players. We are talking about alternative fuels, recycling, or hydrogen. Let me hand over now to Konrad, who will describe our outlook 2030.
Thank you, Karol. Now I will describe the section ORLEN2030. I think that we should ask the question, how are we gonna deliver on our ambition? What we can say, ORLEN further growth will be driven by strengthening position within existing business lines and expansion into new promising areas, as already Karol mentioned. First of all, we want to maximize profits from our current assets, therefore, we're gonna modify our portfolio of upstream assets, increase efficiency of our refining and petrochemical assets, invest in low-carbon conventional power generation, and expand our retail offer. Secondly, we enter into new promising areas via substantial investments into renewable energy sources, alternative fuels, recycling, as well as biofuel components and hydrogen. We will also focus on new formats and services for retail customers. ORLEN2030 will be a company anticipating and proactively responding to customer needs.
All investment projects and M&As will let us to increase the base of customers, and of course, customers are the most important for us, and we have the potential to fully meet their expectations. We operate in many areas simultaneously, and we are confident that this is a recipe for the success. We have a clear target, and we know how to further develop ORLEN Group. We have also huge experience and skilled people, which will allow us to successfully execute our strategic plans. Let's move to slide number 23. To build a strong multi-utility concern, we must further invest in our main areas of business to increase the scale and improve efficiency. We will focus on further consolidation and integration of our refining and petrochemical assets. We will squeeze maximum value from each barrel of oil and expand our capacities in petchem.
We will continue to do what we do the best. Following the successful launches of our CCGT power plants, we will keep investing in low-emission gas-based power generation. We will further develop our fuel and non-fuel retail business. Finally, we will strengthen our resource base via upstream investments. Simultaneously, we will enter into new promising areas within our existing operational segments. We will supplement our refining business with major investment in bio and alternative fuels, including hydrogen. Similarly, our basic and advanced petchem business shall shortly be complemented by the growing capabilities in mechanical and chemical recycling. Within our power segment, we will be strongly invested into zero-emission renewable energy sources, which are set to become an integral part of ORLEN Group business in the future. Our retail offer will be broadened with new services and formats, all under a strong and more recognizable brand, Orlen.
In upstream, we will follow the market and create a diversified portfolio of sustainable assets with a strong focus on natural gas. Those are pillars of ORLEN Group's growth and the transformation till 2030. Next slide number 24, shows the rest of our segments. ORLEN Group definitely have a strong and well-established position in the refining industry, and gonna keep that way. Integrated assets are our competitive advantage. We operated now six refineries in Poland, Czech Republic, and Lithuania, processing, roughly speaking, 33 million tons of crude oil on the yearly basis, which makes us a leader in the region. Refineries will remain our key assets till 2030. In order to maximize the value of our refining business, we need to have the most efficient assets in the Central Europe. To that end, we will seek to get the most from each barrel of oil.
Therefore, we plan selective upgrade and reconfiguration improvements, continued efforts to maximize energy efficiency, cost optimization, and oil conversion, and development of initiatives reducing emission. Within the coming decade, we will reduce CO2 emission for our existing refining and petchem assets by 20%. We also expect Lotos refinery to shortly become a part of our group. That's why we aim to effectively leverage integration synergies, both in the production and logistic level of the group. Given the changing EU regulatory environment, we have to invest in new green technologies like biofuel and biocomponents projects, which will allow us to increase biofuel production capacities more than six times to the level of 2 million tons in 2030. We are also building hydrogen generation and distribution capacities. The consistent implementation of our automotive-grade hydrogen production plant has already positioned us as the market leader.
No doubt, hydrogen is the fuel of the future. Therefore, we will make hydrogen fuel dispensers available to our customers at our fuel stations. Our target is to reach in the refining segment EBITDA at the level of PLN 7 billion in 2030, which is more than 2.5x higher comparing to the results from 2019. Total EBITDA generated by refining segment in years 2021, 2030 is estimated at the level of, roughly speaking, PLN 56 billion. Till 2030, we're going to spend, roughly speaking, PLN 24 billion of CapEx. Our main targets for refining segment are presented on the next slide number 25. Now, let's move to petchem segment. Slide 26. Petrochemicals will be a priority growth area of PKN Orlen until 2030. We aim to become one of the Europe's largest integrated petrochemical producers within the next decade.
Our strategic goal is to steadily grow the share of specialized petrochemicals in the group's product portfolio and establish a strong foothold in the recycling market. This is our response to the global and regional trends. Our 2030 goal for petchem business is to expand the production capacity of basic petrochemicals by development of olefin complex. This should serve a base for developing specialized products such as aromatic derivatives and phenol. Once these plants materialize, the share of specialized products in ORLEN Group portfolio will rise from today's 16% to around 25% in 2030. We will also drive up the group's share in the promising polymers segment. Our strategy until 2030 envisions expansion of polymers value chain and enter into compounding and concentrate. In a parallel effort, we will strive to establish strong footholds in the developing market of plastic waste recycling and biomaterials.
By 2030, PKN Orlen will recycle plastic waste via both mechanical and chemical processes, and will make an entry into the biomaterials segment. We will launch a plastic waste recycling facility with a total capacity of around three up to 400,000 tons per year. Our target is to reach in the Petchem segment, EBITDA, at the level of PLN 7 billion, or comparable level to the refining segment, which is more than 3x higher comparing to the results from 2019. Total EBITDA generated by Petchem segment in years 2021 to 2030 is estimated at the level of, roughly speaking, PLN 48 billion. Total CapEx till 2030 will reach up to PLN 44 billion. Our main targets for Petchem segment are presented on the slide number 27. Now let's move to energy segment, slide 28.
Within the coming decade, PKN Orlen will be the leader of energy transition in Poland and Central Europe. Power generation will be the key driver for a stronger ORLEN Group until 2030. We will continue to build our position by further growth of renewable and low-carbon power generation business. The growth of power generation will be based on renewable sources. We plan major investments in offshore wind farm projects, adding 1.7 GW of capacity, and onshore wind farms and solar PV systems, adding 0.8 GW. I mean that our energy production capacity will increase up to 2.5 GW in 2030, 5 x more than less capacities in 2019. Complementing renewable power will be projects expanding the capacity of our gas-fired power plants with plants located in Ostrołęka, possibly in Gdańsk but also in Płock. I'm talking about new CCGT units.
Total gas-fired power generation capacities of ORLEN Group should exceed 2 GW . Simultaneously, we plan to expand our distribution assets, complementing them with innovative solutions such as pilot energy storage facilities that will help to optimize electricity distribution costs. Our target is to reach, in energy segment, EBITDA at the level of PLN 7 billion, so I think that we like seven, which is more than 4x higher comparing to the results from 2019. Total EBITDA generated by energy segment in years 2021-2030, is estimated at the level of, roughly speaking, PLN 48 billion. Till 2030, we're gonna spend PLN 47 billion of CapEx. Our main targets of energy segment are presented on slide number 29. Now let's move to our retail segment, slide number 30. Retail is definitely the most recognizable part of our business of ORLEN Group.
We are currently running 2,800 fuel stations across five markets in Central Europe. Over the next decade, we will seek to expand our network, particularly outside Poland, to the level of 3,500 fuel stations. This will help to consolidate our leading position in the region and provide a stable source of revenues. The share of fuel stations outside Poland should increase to over 45% in 2030 from current 37%. We are investing heavily to expand our non-fuel offer at the fuel stations and beyond. We will launch retail outlets outside our fuel stations in Poland and the Czech Republic next year. Seeking to the support for those plans, we have acquired Ruch. We will also grow our network of parcel pickup points and e-commerce business. We expect that these initiatives will deliver 50% increase in our gross non-fuel margin by 2030.
Additionally, integration with Energa Group is a very good starting point in building comprehensive B2C and B2B service centers, covering such areas as fuel and electricity sales and distribution of energy. We are also committed to provide advanced and comprehensive services. We aim that our customers of fuel stations will be able to refuel a vehicle by CNG, LNG, and hydrogen. We are set to have over 1,000 electric vehicle fast chargers by 2030. We are constantly working to improve the quality of our services for customers, implementing best sales practice to boost the profitability of our business. Our target is to reach in retail segment EBITDA at the level of PLN 5 billion in 2030, which is more than 1.5x higher comparing to the results from 2019.
Total EBITDA generated by retail segment in years 2021, 2030 is estimated at the level of PLN 42 billion. Till 2030, we're gonna spend, roughly speaking, PLN 11 billion of CapEx in the retail segment. Our main targets for retail segment are presented on the slide number 31. Now let's move to upstream segment, slide number 32. We may say that sustainable growth of our upstream portfolio should support our downstream and gas-fired power generation business. In the coming years, we plan to carefully expand our portfolio of hydrocarbon assets, focusing on natural gas. We plan to increase total hydrocarbon production up to 50,000 BOE per day in 2030. By that time, 20% of ORLEN Group gas demand is to be covered from our own production.
Therefore, our strategic goals are to optimize the upstream portfolio following integration with Grupa LOTOS, and to focus on stepping up natural gas production. One comment, if the PGNiG acquisition is successfully completed, the business expansion materialize, we will review our upstream portfolio. Our target is to reach in upstream segment, EBITDA at the level of PLN 1 billion in 2030, which is more than 4x higher comparing to the results from 2019. Total EBITDA generated by upstream segment in years 2021, 2030 is estimated at the level of PLN 10 billion. Till 2030, we're gonna spend certain PLN 9 billion of CapEx. Our main targets for upstream segment are presented on the next slide number 33. Let's summarize our goals and move to slide number 34.
We may say that in 2030, Orlen will be a multi-utility leader in the region, bigger and more diversified. In the refining, we're gonna increase our throughput capacities from current 35 million tons of crude oil per year up to 45 million tons crude oil per year. Biofuel production will increase up to 2 million tons. In terms of petrochemicals, share of specialized petchem product in our portfolio will reach, roughly speaking, 25%. We will also have installed recycling capacities at the level of 0.3, 0.4 million tons. In energy segment, so power generation, installed renewable capacity will increase up to 2.5 GW, and we are also gonna have gas-fired capacities at the level of 2 GW.
In retail, number of fuel stations will increase above 3,500 fuel stations in seven markets, and we will also develop very quickly number of fast charging points for electric vehicles that may achieve in 2030, the number of 1,000. In upstream, daily production of hydrocarbons will increase significantly from current 18,000 BOE per day to even above 50,000 BOE per day. As I've mentioned before, we would like to have covered our internal demand for gas at the level of 20%. You may say that those goals are ambitious. Yes. We will do our best to deliver them. To deliver these goals, there is a need definitely for some major changes within the organization described on the slides number 35 up to 38. In line with ORLEN Group Strategy, organizational changes will be an integral part of each business segment growth.
Their aim will be to streamline and speed up processes. We will increase spending on innovation, including green technology projects. They will play a key role in developing new areas of our business and our expansion towards increasingly more specialized products and services. Ultimately, we intend to spend 3% of CapEx on innovation, research and development. This will amount to a total of PLN 3 billion over the next 10 years, putting us on a strong footing in relation to our peers. These funds will be allocated to the development of the corporate venture capital fund and our R&D center, among other projects. A key element of ORLEN Group's transition will be digital transformation of its business, integrating all segments and internal processes. This will unlock the previously inaccessible sources of added value and better leverage of capacities and assets.
We will deploy integrated and flexible digital solutions and substantially improve the efficiency of our production and distribution processes, reduce our environmental footprint, and foster customer relationships. In order to support delivery of our strategy goals into integration processes, ORLEN G roup will implement advanced governance model. We will align it with the scale of our business, taking into account the various aspects of sustainable development. Our business growth and diversification goals require human capital with extensive knowledge and competencies. Talent and human capital development will be another prerequisite in the ORLEN G roup transformation. We want to build an organization that relies on knowledge and versatile competencies. Sustainable development initiatives will be an essential part of our strategy. I would like to elaborate a little bit more on this, because ESG is on the radar of many investors, rating agencies, et cetera.
Let's move to slide number 39. Here we may say that ORLEN Group's set ambitious ESG and sustainable development goals, supporting by implementation of its business strategy until 2030. As you may have already noticed, sustainability goals are integrated into business segment strategies. We are turning the challenges of climate change into opportunities for sustainable development in the new strategy by investing in renewable energy sources, biofuels, recycling, and improving our assets' performance. We also analyze our climate impact and adapt our business model to changes in the environment. The priority of this strategy is well-known commitments of the decarbonization strategy to reduce emissions and achieve climate neutrality. The social side of ESG and our interaction with communities has traditionally been strong at Orlen. Here we will strive for business excellence, improving local communities programs.
Orlen has important purchasing power in Central Europe, which we want to use to leverage ESG goals along the supply chain. The new approach involves strengthening sustainability management in the supply chain by monitoring ESG area, integrating environmental objectives, and education on ORLEN Group values and health, as well as safety rules. We take pride of our strong governance mechanism. We want now to promote the best ESG practices among our suppliers in the same way top companies in the world do so. Everything we do in ORLEN Group is underpinned by our values presented on the slide number 40, like responsibility, development, people, energy, and reliability. That's all from my side. Thank you. Now I hand over to Michał, who will give you more color on financials. Michał, floor is yours.
Thank you very much, Konrad. Good afternoon, everybody. Let's talk a little bit about financial foundation. Starting with slide number 42. As you can see in our strategy, our ambition is to be one of the fastest growing multi-utility companies in Europe. In order to achieve this goal, we've established a solid financial framework. We have defined three pillars of our financial foundations for the next decade: efficient investment, sustainable financing, and stable balance sheet. Let's dive into the details on this triangle. We have very ambitious investment plans for the next 10 years. Our goal, our aim, is to select the investment project, which will contribute the most to the group's value. For this, we will invest only in the projects meeting our ambitious IRR criteria.
PLN 85 billion out of PLN 140 billion of total CapEx planned for the next decade will be assigned to projects in new areas of the ORLEN Group's activity, mainly strategic development and investing in the future. Sustainable financing is our second pillar. We want to be an active issuer of green and sustainable bonds, and we want to efficiently use an alternative funding sources as well. We maintain our balance stable throughout the whole period of the strategy, with moderate debt level, not higher than 2-2.5 net debt to EBITDA. We will keep strong investment-grade credit rating. These three pillars, namely efficient investment, sustainable financing, and stable balance sheet, will be cornerstones for the value creation of ORLEN Group. Our EBITDA at the end of the decade will grow by approximately 2.5x . Our ROACE will reach double-digit levels starting 2025.
Not only we want to create value to our shareholders in long run, but we will also share our profits with shareholders on the annual basis. We'll pay dividend of minimum PLN 3.5 per share starting 2021. Moving to slide 43. This one is presenting state of CapEx over the next decade. Approximately PLN 55 billion will be invested in our current core business assets in the refining segment, fuel retail segment, and energy distribution, in order to maximize the performance and secure financial resources for investments in two other group of projects. Strategic development projects will be critical for creation of the group's value over the next decade. Investment in petrochemicals, low and zero emission energy sources and non-fuel retail will constitute over 50% of our total CapEx.
In those two group of projects, I mean, maximizing performance and strategic development, our intention is to achieve the return on investment of at least three percentage point above weighted average cost of capital, which we calculate individually for each segment and project type for the project which returns are not regulated. We do not forget about the projects which will drive our value in the long term, beyond the time horizon of this strategy. This is why we will invest around PLN 10 billion in new mobility, hydrogen technologies, recycling, R&D, and digital transformation. Slide number 44 is presenting timeline for CapEx on key groups of projects. Majority of our investment projects in our current core business are planned to be completed in the first half of this decade. Proper timing for this investment will be critical for their efficiency.
Most of these projects shall not be postponed due to the life cycle of traditional business. Investments in renewables and sustainable projects will be realized throughout the whole period of the strategy. On slide number 45, we are presenting more details about our balance sheet and funding sources. A stable balance sheet and well-balanced funding structure will be the foundation for our growth. Our investment plans are well-aligned with our financial capacity throughout the period of the strategy. We estimate that we'll be able to cover most of the investments and cash spendings with current operating cash flow within the next decade. In order to be efficient, we also plan to leverage our balance sheet to the optimal extent.
As I said, our goal is not to exceed 2 x net debt at EBITDA in long run, with maximum level of 2.5 x in short periods of time, especially when recording high accumulation of organic investments and major acquisitions. I would like to underline here that our base scenario for Orlen's PGNiG acquisition and takeover is on the non-cash basis. In line with the EBITDA growth, our debt capacity will grow as well. We estimate that with PLN 26 billion of EBITDA in 2030, the debt capacity will be higher even by PLN 40 billion-PLN 50 billion by the end of this decade. We plan to balance our funding sources through establishment of EMTN program in first quarter 2021, which will give us a maximum flexibility in terms of timing and scale of bonds issues on international market, especially in Euro market.
It is also our intention to be a frequent issuer of green and sustainable bonds, both on the domestic and foreign market. We will also actively use alternative source of funding in our activity, including limited recourse project finance, particularly in the power generation and petrochemical projects. EU funds dedicated to sustainable innovative projects and co-funding of selected projects with strategic investors, like we do for example in offshore wind farms. Potentially, we can also use hybrid bonds to the extent they meet rating criteria. Slide number 46. We'll grow and diversify our EBITDA in a way which will make it more resilient to macro environment, mainly to increase of contribution of petchem and energy segment. Both segments should bring additionally PLN 10 billion in total to Group's EBITDA by 2030. We believe that more resilient EBITDA, in combination with conservative debt level, will translate to strong investment-grade credit ratings.
Last but not least, slide number 47. Transparent and stable dividend policy. We want our shareholders to benefit both from the long-term value creation and from the short-term cash flow. We come back to the previous dividend path. Next year, we will pay at least PLN 3.5 Per share. In the following years, the dividend will be at the same level or higher. That's all from my side. I hand over.
Yes. I think, operator, that now we finalize the presentation, we can kick off a Q&A session. We are ready to take the questions.
Perfect. Thank you. We will now begin our question and answer session. If you have a question for our speakers, please dial zero-one on your telephone keypad. That will enter the queue. Once your name has been announced, you can ask a question. If you find your question is answered before it's your turn to speak, you can dial zero to cancel your question. If you're using speaker equipment today, please lift the handset before making your selection. One moment please for the first question. Our first question is from Ms. Ekaterina, Bank of America. Please go ahead, madam. Your line is now open.
Yes. Hello, everyone. Thank you so much for the presentation. I have several questions. The first one is in terms of timeframe of CapEx and EBITDA growth. I can see slide 44, where you have put an illustration of the timeframe of investments. In terms of the numerical share of CapEx that can be spent before 2025. From this chart, most of the investments already start in 2021. Does it mean that your CapEx can go straight to PLN 13 billion-PLN 14 billion per annum already from next year? Same question on the EBITDA growth. I understand that the EBITDA growth will be mostly back-loaded, but what share of the growth we can see before 2025? The second question on dividends.
Do you plan to have a dividend policy in place that will have a formal progressive dividend policy of at least PLN 3.5 per share, or that is still your intention to pay? The last question in terms of leverage targets. You mentioned to try and keep that to be there in the long term, 2.5x maximum threshold in the short term as you go through the CapEx. Is that a strict target, in case you are approaching your maximum target? Can you scale down investments or it will be more of a medium-term target and fluctuation from year to year will be possible? Thank you.
I can take the first question. Konrad Włodarczyk, speaking about the CapEx. As you said, the first half of the decade will be fully packed with CapEx. The peak CapEx probably will be in 2024. Of course, we will, let's say, adjust the CapEx to the macro conditions and our financial possibilities. In terms of EBITDA, you may assume that it will gradually grow over those 10 years. Yes. Taking into consideration that some of the projects are to, let's say, to deliver this PLN 26 billion must be done right now or never. You may assume that majority of those big investment projects will be a part of energy segment petchem, but as well as refining business.
As regards to your other questions, Ekaterina, you asked about the dividend. This is our goal. We want to pay at least PLN 3.5 . Of course, the final decision belongs to the shareholders, but we want to provide our shareholders with a clear, transparent dividend strategy. At the same time, we want to keep a safe level of the debt, as I said, and you have correctly mentioned that it will be, in general, 2x net debt to EBITDA. At a short periods of time with accumulated investments or banking investments of a big M&A, we can exceed this level and come up to 2.5x net debt to EBITDA. I think we have couple of tools which will enable us to keep this target. We can either shift some investments.
We can use limited recourse project finance and keep part of the investment off the balance sheet. We can look for the partners to work together with us on some strategic investments. Last but not least, we can also consider hybrid bonds, which would also deleverage our balance sheet.
We feel confident that we can pay the dividend that we have described. We'll keep the same level of the debt presented in this strategy, and realize the CapEx plan at the same time.
Maybe one comment from my side. Please be informed that this presentation, so the figures based on the consolidation of PKN ORLEN, Energa, and LOTOS figure s, it does not include PGNiG's due to the fact that PGNiG is on the very initial stage of the process. After we complete the PGNiG transaction successfully, the strategy will be updated.
Understood. Thank you so much. If I may follow up on the PGNiG. It looks like PGNiG doesn't really fit within your 2030 and 2050 vision. To what extent this transaction, PKN ORLEN wants to do this transaction and is working to finalize it? We may still see cancellation of the transaction, given such ambitious investment program ahead of the group?
Okay. Thank you very much for this question. Karol Wolff here. We wanted to make this strategy open for PGNiG. In the value maximization part or in the value maximization field of play, we included energy and gas distribution as our area. We focus on gas upstream in our upstream section. We want to keep the strategy open for PGNiG. We do not cancel the process. As Konrad said, we are now in the initial stage of acquiring the approval for PGNiG acquisition. We want to update our strategy when we will be more advanced or when we will have the approval.
Understood. Thank you so much for your answers.
Operator, we are waiting for the question.
Yes, sir. Are you still on mute by any chance, Mr. Patricot?
Oh, yes. Hello, this is Henri Patricot from UBS . Sorry, it was my turn. Thank you for the update. Couple of questions, please. The first one just to follow up on the financial framework to clarify, so in terms of the flexibility in the framework, it sounds like if the macro turns out to be weaker than expected, then you look to let a little bit of rise to 2.5 x, and then you'd look into postponing some projects, it sounds correctly. Conversely, what happens if we see stronger macro than you expect? Does that mean then faster dividend growth? Would you return that excess cash flow to shareholders? Secondly, I wonder if you could give us a bit more details around the growth that you expect in petrochemicals, which is the largest contributor with power generation.
Looks like a good part of it is driven by much higher benchmark margin. Wondering what's driving this sort of bullish expectation around the model EBITDA margin, especially in the later part of the 2020s. If you can give us an indication perhaps around the volumes growth that you expect in petchem. Thank you.
Let me start with your first question, Henri . Yes, your understanding is correct. We can consider shifting of some investments if the macro will be not as we are expecting to be in order to pay the dividend. Regarding your question, whether the dividend can be higher if the macro is correct, it all depends whether in the past we will need to shift some investment or not. We have to look at it in total, but we want to communicate, and we want to give an assurance to our shareholders that it will be not less than PLN 3.5 per share. If we are able to generate more operating cash flow and EBITDA, we can consider higher dividends in the over the cases as well.
Okay. Bartek, can you take the second question?
With regards to the macro assumptions to the petrochemical business, we do assume some post-COVID weaker margin in the next few quarters. That's the reason why we see some weaker assumptions for the short and mid-term. This is the way the situation is also viewed by all the market players now. Longer term, we assume the macro to be not excessively good, but to be as good as in the last 20 years on average. We assume the margin to be quite constant. This profitability results from the fact that the business is cyclical and the growing business and the growing demand for petrochemicals, the pricing of the products needs to be high enough to get financing and get approval for the growth projects to be realized. When the growth projects are realized, then we see some macro rationalization.
With growing demand, we see once again growing prices. This is like a rational approach to the macro in the petrol we see. With regards to the volumes, just on the monomers, polymers side, we will be too precise with that, but we do expect complete 10% of increase in the volumes. What is more important, we would like to first build some petrochemical-based products. We build the value, build the volume of basic petrochemicals, and then extend that basic petrochemicals into advanced petrochemicals and into polymers. The more advanced you are in the product value, the higher the margin, the higher the profitability of the project. The more advanced you would like to be, it is more difficult to get there. You need to get the technology, you need to get the market.
What I can say here is that we do perceive each of the growth projects, both from their own projects. Let's say our own projects for growth. Simultaneously, we always analyze both acquisitions and look for the best solutions from the profitability side.
Thank you, Wojtek.
Thank you.
Our next question is from Igor Kuzmin, Morgan Stanley. Please go ahead. Your line is now open.
Hi, this is Igor Kuzmin from Morgan Stanley. Thanks very much. First question from me is, I would like to just clarify, in terms of the dividends, is there any scenario under which the dividend can fall below the PLN 3.5 per share? Is it basically unconditional, no matter what happens to the macro situation or the CapEx intensity, or whether you're going to acquire PGNiG at price below the targeted levels or desirable levels? I just want to make sure how solid this floor is, PLN 3.5 per share. If there's any scenario, I would like to possibly, if possible, to explain, whether it potentially might unfold. The second question, I would like just to maybe understand a bit in terms of the covenants, gearing target clear.
Can you just maybe explain a little bit, what are your covenants and what are the impacts of the thresholds and on what parameters this is based on? Another question I've got is in terms of the upstream business. Your business is getting bigger. That's clear. Do you feel strongly about retaining the upstream business, especially given your focus on decarbonization and given the focus of the markets on cleaner businesses, et cetera? Refining your core business downstream, your core business, that's great. In terms of the upstream business, how do you see some of the upstream businesses which are potentially not really fully integrated, like the business in North America, for example, et cetera? Do you foresee the scenario where potentially you just can dispose those businesses or is it difficult to say now? These are three questions for me. Thanks.
Okay. We don't see a scenario under the current strategy that we don't pay the dividend that we have declared here. Something dramatic would need to happen on the market that would probably force us to review the whole strategy, not only the dividend strategy. Under this document, we don't see this scenario negative enough not to pay the dividend in the amount that we declared. As regard to the leverage, I understand you want more details about the components, yes? How we are calculating the net debt and the EBITDA, yes, is this correct?
No. Sorry, just to be clear about covenants. Do you have any sort of specific covenants attached to this target, like on your any credit lines or bonds, et cetera?
Well, in terms of bank covenants, the maximum level we have is 3.5 x EBITDA. Our rating agencies, they claim they would like to see us below to 2.5 x the EBITDA in order to keep rating at the current level. These are the thresholds we have.
Okay. Sorry, 3.5 is what times EBITDA? Sorry, what is the?
Yes, net debt to EBITDA is.
Oh, okay. Okay, got it. Thanks.
Regarding your third question on upstream business. During strategy, we work under the assumption that we have our upstream portfolio at Orlen. The portfolio that produces about 20 kboe daily, and portfolio of Lotos, which is of similar size. We are aware that when we are talking about integration with portfolio PGNiG, which is 2.5x larger than combined portfolios of Orlen and LOTOS , then the level of upstream presence would be very different. Our strategy now is to focus on this portfolio that we have, to focus more on natural gas and to revise or to put a new strategy for upstream portfolio after acquisition of PGNiG.
Okay, thanks.
Our next question is from Oleg Galbur, Raiffeisen. Please go ahead. Your line is open.
Yes, good afternoon, and thank you for the presentation. I have few questions. First, let's say group of questions. 10 years is a long period of time. Therefore, I wonder if you have any, and are willing to share with us any of your intermediary targets that would help us better assess your 2030 strategic objectives. For example, it would be useful to know how much of the growth projects that you target have already or are close to a final investment decision. Just an example, can you talk more about your growth ambitions in the renewable energy generation? How much of the targeted 2.5 GW should be developed over the next five years? The second question refers to your macro assumptions, which at least in my opinion, look a bit optimistic and above the current market consensus.
It would be useful if you could present us a sensitivity analysis so that we understand how would the projected EBITDA be impacted by the change in the macro environment. Rather a follow-up on dividends. Still, I'm not sure I fully got it. Provided that you are successful in acquiring the PGNiG, what should be or what kind of impact should we expect on the targeted dividend of 3.5%? Would this acquisition rather allow you to revise upward your dividends, or can it put a pressure and force you to lower this level of 3.5 minimum dividend? Thank you.
Let me start with the last question. As Karol mentioned before, when we will be closer to the PGNiG acquisition, or we complete this acquisition, it will require us to revise the whole strategy, including the dividend strategy. This strategy is not covering PGNiG acquisition, so the dividend policy is also not covering the PGNiG acquisition. Once we will complete this acquisition, we'll review both the strategy and the dividend policy.
Building on that, answering your first question about 10-year horizon. We wanted to show longer horizon for the first time, of ORLEN Group, because we are aware that challenges that are in front of us are challenges that require long-term investments and long-term investment plan. At the same time, we are consistently planning, power planning, of course, shorter terms. What is important here is that we want to cyclically update the strategy and update our directions. As we did it earlier, one, two years. Currently, the current market environment is very difficult to forecast in short term. All the factors that are implied by COVID pandemics and short-term market trends make it very difficult to plan one or two years in advance. That's why we haven't decided to show the short-term target at this time.
Our next question is from Tamás Pletser . Please go ahead. Your line is now open.
Yes, thank you very much. Good afternoon. I think most of my questions were answered already by you. Only two remain on my side. Hello? Can you hear me well?
Yeah.
Yes, we can hear you.
Okay, great. I got two questions only. The first question is, if your strategy includes disposal of the assets, does it include the potential impact from the sale of those assets, which you should do when you merge with the LOTOS Group? That will be my first question. My second question is that it's still not clear for me why you come up with a strategy without PGNiG and why you come up with a new strategy potentially a year from now if everything goes well and you acquire PGNiG. Can you shed a little bit more light about the rationality to issue a strategy right now? Thank you.
Okay. Answering your second question about PGNiG. The old strategy was a bit outdated as we wanted to ensure our view from current perspective. At the same time, as we said, we are too early to show the picture of our business with PGNiG. We wanted to have more details on the business. Regarding your first question on disposal of assets. We do not exclude it, but we haven't made a real decision so far.
Yes. We don't have asset disposal. It's not in our best-case scenario in this strategy. As Karol mentioned, we do not exclude.
Okay. When did you calculate your target? Did you include those assets which you have to dispose due to this merger with LOTOS, or are they excluded from these estimates?
These assets that are disposed in the process of implementation of remedies are included into the strategy.
You assume that you could keep those assets. Am I correct with this?
No.
No, we mean that we take them into consideration. We exclude them from calculating the targets. Yes.
Oh, that's clear then. Thank you very much.
Our next question is from Mr. Dzieciolowski, Citibank.
Good afternoon. It's Dzieciolowski from Citibank. I have a couple of questions. The first one is on the dividend. I have to come back to this one. Correct me if I understood it correctly, really. You have to now make a share swap with PGNiG, and you say you promise to pay PLN 3.5 up until this transaction happens. Thereafter, it's quite open because you will work on your strategy. In this context, what is your thinking, given LOTOS will be a subsidiary, will you keep paying dividend out of LOTOS or up until transaction and thereafter, minorities cannot count on the pay? That's the first question on kind of a dividend in the context of this deal.
Piotr, yes, you clearly understand that once the transaction with PGNiG will be concluded, then we of course have to return to the dividend policy because at the moment, we don't know precisely how the transaction structure will be. It might be that it will change also the number of shares we have. Because of that, we need to then revise the strategy, but it is our intention to keep paying the dividends later on, yes.
Why did you decide to pay PLN 3.5? What justifies this amount?
We recognize the need to continue the path that we initiated before COVID comes, and that was the starting point for us.
Okay. I also have a question on strategy, because in your presentation you say that you want to be a leader in sustainable business, play energy transition, and have a carbon neutral company. Yet, when I think about PKN structure with PGNiG, assuming that happens, how much of your business in 10 years from now will be exposed to CO2, related to upstream power generation, refining, and so on? How do you feel that there will be a right amount? On the same subject, at what point in time do you think Mazeikiu Nafta can actually stop operations because of the energy transition process? Is there any time point in your strategy thinking that you no longer need it, that we will no longer need it?
Okay. Thank you for this question. Regarding our decarbonization and sustainability, as we said, we want to achieve a target of 20% decarbonization of our current stream, current assets by 2030. We want to do that via energy efficiency and renewable energy. In our strategy, we want to strongly increase the share of renewable energy in our portfolio. We want to increase the install capacity of renewable energy five times to 2.5 GW . We want to focus on that direction in coming years. At the same time, we want to treat the oil and gas business as a source of profit for financing this investment. As you can see, this is rather a transition strategy that will allow us to build further on the carbon neutral businesses after 2030. We show the path how we want to achieve that.
In terms of ORLEN Lietuva, so Mazeikiu, yes, we always clearly said this is one of our key assets. 50% of import of the diesel done by PKN ORLEN comes from ORLEN Lietuva, and our aim is to strengthen ORLEN Lietuva position by doing investment in hydrocracking installation. Of course, how big this investment
I'm sorry to interrupt. Please, I understand. I understand the logic of what you say. I'm just asking, if we have an energy transition and we have a carbon zero 2050, there must be a point at which you shut it off. I just ask you, when is the point you're going to face this decision? You don't think about it, you think you kind of can create some petchem installation next buy, and then it will work forever?
In the horizon of the strategy in 10 years, there are no such plans to dispose this off.
Okay. The two last questions from my side, please. I just want to ask you this. You're targeting a double-digit returns on invested capital in the second half of the decade, and big part of your investments actually go towards renewables. The main leaders of renewable developments in Europe actually say they're coming to low single digits, whether that's offshore, onshore or solar in a very commoditized market. What gives you confidence you can actually outperform the peers by such a high margin on new investments that they're going to be double-digit? What are the other areas where you see such strong double-digit returns?
Well, you are right that we will most likely not be able to reach double digits in renewables. Please remember that we are talking both about the massive investment in other segments and about our current assets, which are also generating a substantial part of the profit. It will take into consideration both current assets and the future investment in other segments, for example, petchem or gas-fired energy production sources, which are able to generate double-digit returns.
Okay. Thank you very much.
You are welcome.
Our next question is from Michał Kozak, Trigon. Please go ahead, your line is now open.
Yes, thank you. I have three questions. Maybe the first one. You presented forecast of model refining margin that amounts to $4.9 per barrel since 2026. Am I right that this does not include differential? Why did you assume higher than long-term average margins in such a tough environment in the following years?
Okay. Wojciech?
Hello, everyone. Just to confirm, the refining margin as projected does not include differentials as you referred to. All in all, the same like in the second business, we also see some short- and midterm impact of the COVID situation now. Longer term, we expect some rationalization and more reversion. This is slower environment compared to the
Okay. Thank you. Maybe the second question. In petrochemicals, because last year you had PLN 2.3 billion EBITDA in the segment, and it is going to increase by PLN 1.5 billion due to previously announced PLN 8 billion CapEx. In strategy, you assumed PLN 7 billion EBITDA. We have over PLN 3 billion gap in operating results. Could you explain more precisely what is the macro and investment effect? Is projected model margin strictly result of higher yield of more specialized products?
Basically, the numbers we referred to are the numbers that include the petrochemical development now in the EBITDA projection period, but there are much more projects included there. First of all, we have expansion of basic petrochemicals as we announced, and this is olefin and some more. We have advanced petrochemicals. They include steam, that the information, the project is ongoing. You have polymers. We have basically plenty of options to expand polymers at good profitability with good projects in the markets that we are already operating in. This is some silica, 50% or a little bit more, referring to the budget for the petrochemistry that we mentioned, PLN 40 billion something. Basically, our intention with this project is first of all to cover the deficit of petrochemical and chemicals products we have in the region.
Assuming, and if you agree, that you see the petrochemical product demand to grow, first thing. Second thing is that you see the growing deficit of that kind of products in the region. We know that someone will cover that deficit, and either it will be us leveraging on synergies that we have with integrated assets, that we have been already present on some of the markets. Some of the others, we need to come back, and we need to get. This is true. This is kind of challenge, but here we have some few strategies implemented, like our own projects and M&A projects. If you look from this perspective and note all the assets that we have, you know, we have plenty options. Taking granting of that projects, we can have the best ones and the best ones to implement with the partners.
Answering directly your questions, PLN 7 billion EBITDA generated by petchem segment in 2030 includes PLN 4 billion from initiatives and the rest is from the core business baseline.
Thank you. The last question, if I may. What is your forecast of LOTOS EBITDA and its result in refining in 2030? The same question concerning EBITDA of Energa assets, because you presented PLN 4 billion EBITDA from acquired LOTOS and Energa, but I think it is last 12 months clean results, but not projection in the following 10 years.
We've guaranteed PLN 4 billion together. We don't want to disclose the precise numbers for particular companies.
Okay. It's previous results, so last 12 months, or is it a projection?
It's averaged from three years.
Okay, thank you.
Our next question is from Robert Maj, IPOPEMA Securities. Please go ahead.
Yes, thank you. For my question, Robert Maj from IPOPEMA Securities. Around the dividend, if you can cast more color on that. I understand that dividend from 2020 will also amount to PLN 3.5. Can you provide a split between what amount of this dividend would come from the free cash flow and what amount will come from debt? You know that after the Energa acquisition and the EBITDA among the COVID times is a little bit stretched. Could you provide such a split?
You are correct. It will be 3.5. No, actually, it's not possible to give you such split because on one hand, you have several elements and there's dividend, but CapEx spending, interest rate, tax spending, et cetera. On the other hand, we have operating cash flow and the corporate debt, which is not assigned to any of the elements on the other side.
Maybe I can carry on with this question and ask you some more going forward.
Sorry, if you're asking whether our debt will go up next year, yes, most likely it will go up.
Okay. How long can you pay actually PLN 3.5 from debt going forward? If, for instance, the macro conditions are worse than you assumed to cover the dividends from the free cash flow, for instance.
Well, it all-
Have you made-
It all depends on our investment plan, how fast it will be realized, and what kind of funding sources we will use to make it.
I understand that the investments are more priority for you than a dividend. If the macro conditions are worse, you will prioritize the investments rather than a dividend.
I didn't say that. We mentioned at the beginning that we will be flexible in terms of investments and the way of financing them, also in order to make sure that we are able to pay the dividend. That's what I said at the beginning.
Okay. What happens with the dividend if the net debt to EBITDA goes above 2.0 or even higher? Are you still going to pay PLN 3.5?
No, we will manage in a way not to be in a situation that our net debt is 2.5 or higher.
My thinking is just what would need to happen for PKN not to pay PLN 3.5 dividend per share. I just wonder where the net debt to EBITDA would need to end up or how long you can pay it from debt purely. This is just broad thinking.
We have a couple of variables on the table. Yes, we have maximum net debt. We have investment plan of the CapEx, which we can influence, and we are deciding what to invest and when to invest and how to finance it. We have a dividend policy, and it's our managerial responsibility to pay the dividend that we are declaring.
Maybe on Energa tender offer, because it turned out that you were unable to buy enough shares to make a squeeze out. Right now, Energa is still a listed company. What happened next year with Energa shares and your tender offer?
The tender offer has just been settled. We acquired additional 10%, and the next step is the delisting actually of the shareholders who would stay as the shareholder, but without liquid shares on the stock exchange. That's the case actually. The rest, well, everything depends on the prospects of Energa going forward and the discussions with the shareholders. At that stage, we are not discussing internally some major steps with regards to the shareholders. The next step is the delisting and the integration with PKN ORLEN , and that's the case.
Maybe last question from my side. It's almost end of 2020. Maybe you can tell us more about the shape of the future transaction with LOTOS and PGNiG? What should we expect here, especially in terms of LOTOS? Is tender offer on the table, or are you going to enable a share swap? What should we expect is more likely scenario?
Yeah. Well, unfortunately, there is nothing more to say comparing to our previous discussions. Our goal is to limit our cash out, that's for sure. Nonetheless, at this stage, it's so difficult to comment on the ultimate structure of the transaction. I would rather expect that the transaction will become more and more clear in Q1 next year, actually.
Okay. Thank you very much.
Yeah.
Our next question is from Igor Kuzmin, Morgan Stanley. Please go ahead. Your line is now open.
Hi. Again, this is Igor Kuzmin from Morgan Stanley. I have three more questions. They're not very long. First one, your slide 10 on the presentation, EBITDA target for 2030, PLN 26 billion versus PLN 9 billion EBITDA in 2019. The difference is about PLN 17 billion. Out of the PLN 17 billion, would we be able to guide how much of that, in percentage terms and all, is due to your macro assumptions, and how much of that is due to the inherent improvements in the business, whether they are organic or inorganic? Maybe you can split that as well. That's question number one. Question number two, going back to the PGNiG potential impact on the dividends. Perhaps maybe I'll ask that question a slightly different way. Your guidance is PLN 3.5 per share in terms of the dividends.
If PGNiG transaction goes ahead, would you foresee the absolute amount of dividends in total amount, not per share, but in total amount, potentially, is there a scenario that potential amount coming down? The total amount, which is implied by the current number of shares and 3.5 forward earnings per share, is unlikely to go down. We don't know what's going to be dividend impact from PGNiG transaction, but if number of shares will change, at least will you be able to defend or stand by the overall dividend commitment in absolute terms overall? Third is the question about slide 45 in the presentation. I was just wondering, there is a chart there. On the left-hand side, you showed three buckets, investment, dividends and taxes, and other. Would you be able to comment what this PLN 25 billion is about? Thank you.
Yeah. Regarding the dividend, having in mind the leverage of PGNiG and the fact that our preferred transaction structure would be a non-cash basis, the merger with the PGNiG would theoretically improve our leverage and should make the payment of the dividend easier than without it. I don't assume that we would pay lower dividend in terms of nominal following the acquisition of the PGNiG. As I said, I would not like to refer to the dividend strategy post PGNiG acquisition because we're not analyzing it for the sake of this strategy.
That helps. It helps. Yes. Thank you.
The last question was about the PLN 25 billion on the top. Yes? For example, interest rate we have here, or CO2 emission rights spendings we have also here.
Understand. Thank you.
And- You're welcome.
Regarding your first question on split on macro and other growth factors. It very depends from segment. What we calculated is the split of EBITDA on different segments. As you can see, the energy and petchem segments are here, one of the fastest-growing segments that determine our key strategic growth. We do not think that a unified number for total ORLEN Group here of share of macro impact or other factors would be very helpful for you.
Okay. Our next question is from Mr. Dzieciolowski, Citibank. Please go ahead. Your line is now open.
Piotr, you are on mute probably. We cannot hear you.
Apologies. I have three very quick follow-ups on LOTOS . You didn't seem to answer my question about the LOTOS dividends. Can minorities of LOTOS count on the payouts over there? Assuming that one stays listed. We are not clear whether the minorities agree on the transaction. On the PLN 4 billion contribution from Energa LOTOS, I didn't actually quite get what is this number representative of. Is this just a historical contribution or so pre-delayed COVID world, or this is a future estimate of the business? How would you quantify the disposal of 30% refinery and then synergies? Can we actually get the normal figure of what the uplift will be assumed to of the LOTOS and Energa combined or separate?
Okay. We usually expect our subsidiaries to pay the dividends to accumulate the cash on the PKN ORLEN level. This will probably be the case also with regards to LOTOS. Yes, if there will be operating cash flow generated positive and there will be space for payment of the dividend, we will expect to push to pay the dividend.
This PLN 4 billion contribution, which you assume, is it pre-30% disposal, so pre-remedies, and what are the synergies you in your profile?
In general, we make some assumptions with regards to remedies. Of course, to some extent, raise more internal discussions around the synergies. Actually, as my colleague said, we wouldn't like to split that number into the two companies, but I would say more or less, it reflects the historical average of both Energa and LOTOS to some extent. That's the one.
Okay. Can you also, as the last thing, take me the bridge between the PLN 3.1 billion EBITDA in retail segment and PLN 5 billion from now. You are going to add a good 20% of stations, so there's a good chunk coming there. Then you also discussed in press, the different delivery services, retail chains. Can you explain why the growth hasn't been really as aggressive as other divisions?
In retail, we have some key assumptions for the EBITDA, and we would like to maximize the incomes on our core operations there. We also expected that we can expand our network by roughly 700 new stations, maybe organic way, maybe some M&A transactions. We'll see what's available for us to expand on our markets where we are operating in. There is a big chunk right there. I also have some plans to build new business models in e-commerce and online perspective. We have some ideas regarding the overtaking role. We strongly believe that we'll be able to increase our gross margin there.
I'm asking about something different. Last 10 years, this business has grown from PLN 800 million to PLN 3.1 billion. There's a PLN 2.3 billion uplift in the last years. You're going to spend a lot more money on this business now every single year, according to your presentation. Yet this business is about to grow a little bit less than last ones. Is the kind of conclusion fair that you see a top of the possible margins that you can generate on the current asset base?
Yeah. Piotr, basically we will put most of our CapEx in the new businesses, new projects in petchem and in energy sector, which means we expect to develop much faster and we suppose to earn money right there as a retail. Retail is a very good segment. It's quite saturated here in Poland. Further growing of this segment, is much more difficult for us than building up new lines for petchem.
For example, energy sector. It's not like we reached the limit, because we are going to expand new ways and new formats to increase our margins there. But this market is, as I said before, quite saturated and it won't be as easy to expand organically. It might turn out that we'll be able to increase through other means within that segment. But it is what it is. We strongly believe that increasing EBITDA in the next 10 years from PLN 3 billion to almost PLN 5 billion is not a bad achievement after all.
We also need to invest to keep the current profitability, because you know very well that the retail segment in general is changing very rapidly, and there are a lot of innovations that are on the market. Customers, I'm talking not only about the fuel, but non-fuel retail segment. So we have to be innovative. We have to change ourselves. We have to adjust ourselves to customer needs, and that requires investment, and the investment also to keep the current high profitability of this segment.
Okay. Thank you.
Our next question is from [Amir Popowski. Please go ahead. Your line is now open.
Hello. Thank you for the presentation. [audio distortion] . I would like to ask about CapEx on the beginning of the Q&A session, Konrad highlight that we expect that peak of CapEx in 2024. Can you please put some light on this statement? Do you expect the CapEx of about PLN 20 in 2024 or it's like PLN 23? Basically, what kind of project are you assuming during this CapEx peak in 2024? That's the first question. The second question is related to CapEx. It's about free cash flow. I would like to ask if you expect to generate a positive free cash flow in any of years in the first half of the strategy, 2021, 2025. How much free cash flow you expect to generate in total, among these years, 2025. The third question I would like to just ask about dividend.
Sorry for how many questions about it. I would like to confirm if I understand you correctly. Basically right now we should expect PLN 3.5 per share, for the next one or two years, and later on, if you will be able to acquire PGNiG, we should expect a strategy update and you will set a new dividend target. Your current dividend ambitions are correct until you will make the update of PGNiG. Thank you.
Okay. Regarding your first question. Yes, as Konrad said, we start many new projects in the first half of this decade, and we expect the peak of our CapEx investment accounts 2024. This is the conclusion that is important here. We cannot now say about precise high of the CapEx. It will be adapted, as we said, to our current macro environment and our current conditions.
As always, we'll present the details about next year CapEx with publication of four quarter results. At the beginning of February, we'll be able to give you more lights on the 2021 CapEx. Regarding your second question, yes, you're right that CapEx over the next five years will be higher than free cash flow. That's why I mentioned that it will be our responsibility to manage the CapEx level over the years and to apply such a financial tools like limited recourse project finance or attracting EU funds to finance part of our investment. To find the partners to co-finance some investments. I also mentioned that we are open and we are ready to consider hybrid bonds to leverage ourselves over this period. Yes, it's gonna be challenging. Nobody said it will be easy. We need to transform ourselves. The market is requiring it from us.
Our shareholders are requiring it from us. On the other hand, we really believe that we should be an attractive dividend company at the same time. It's going to be a challenging five years in front of us, but we have at least a couple of scenarios that we can reach the target that we are showing to you, and we really feel confident that we will hit our target within the financial framework that was presented today.
Okay. In the strategy, you expect your total free cash flow from this 10 years period to reach PLN 55 billion. Basically, if you deliver, let's say, zero free cash flow in the first five years, do you expect to deliver on average PLN 5.5 billion, more, PLN 10 billion of free cash flow in the second five years per year?
I didn't get that.
Because in the-
Clarify.
In the strategy, you said that you will deliver PLN 55 billion of free cash flow through these years because it's PLN 195 billion of operating cash flow. It's PLN 100 billion of CapEx, so it's PLN 55 billion of free cash flow in 10 years. Right now, in the first five years, you will have high CapEx. Orlen will not rise to the level to cover this CapEx. You will not generate the positive free cash flow in the first five years. You got remaining five years to generate the PLN 55 billion of CapEx. That means that you will have to generate PLN 10 billion of free cash flow per year. Is that correct?
No. We don't have a split over the first five years and the second five years in the presentation. We didn't say how big will be the gap over the next five years, yes? For example, the alternative funding sources we can apply mainly over the next five years.
Okay. Thank you. About the dividend. Am I correct that we can be certainly sure that the PLN 3.5 is low for the next one or two years, and if you will be able to acquire PGNiG, that may change, and I will set the new target. Am I correct?
Yes, you are correct.
Okay. Thank you very much, guys.
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