Contractors and suppliers

The rules governing cooperation with business partners are defined first of all in the PGE Group Code of Ethics, which is a set of values and principles in force in the entire PGE Group. Among other things, it defines PGE Group’s approach to building business partnerships. The PGE Group Code of Ethics is supplemented by the following practical guidelines:

1. Good Procurement Practice
2. Code of Conduct for Business Partners of PGE Group Companies

Good procurement practices are a set of recommended attitudes and principles that should be followed by employees and potential business partners during tender procedures. The principles are based on four aspects of cooperation: partnership, transparency, fair competition and information security. The good procurement practices also include the “no gifts” rule, which is binding for employees initiating a procurement process (submitting a purchase application), members of committees and all persons participating in the process and persons performing contracts concluded as a result of the procurement process.

PGE Group’s expectations towards its business partners are set out in the Code of Conduct for Business Partners of PGE Group Companies. The content of this document is available on the companies’ websites (most often in the section dedicated to procurement procedures). Additionally, the obligation to comply with laws and ethical standards, with direct reference to the provisions of the Code of Conduct for Business Partners of PGE Group Companies, is applied as a standard element of contracts.

In order to mitigate the risk of incurring financial or reputational losses resulting from establishing or maintaining a business relationship with a partner who does not comply with the law and ethical principles, PGE Group companies examine available information on their business partners in accordance with internal regulations, in particular in the areas of procurement raw materials for production and trade.

PGE Group uses conditions of participation and criteria that appreciate decent remuneration of employees hired by the contractor. Employment based on full time work contracts is promoted, in particular in the following areas: the call centre, IT support, security services, cleaning services, as well as repair and construction services. The following aspects are subject to inspection: the contractor is not in arrears with statutory payments (social insurance, taxes), the contractor has appropriate insurance, permits and certificates, and ensures a high level of occupational health and safety. Every contract with suppliers, subcontractors and business partners contains clauses that address labour issues, fire safety requirements, waste management, property protection and environmental protection.

The clauses contained in every contract between PGE companies and their suppliers, subcontractors or business partners

PGE Group’s procurement system, the implementation of which was completed in 2020, is probably the largest customised procurement system implemented in Poland. It is also the second largest IT system at PGE Group. In 2020, it handled the procurement needs of 12 companies (PGE SA, PGE GiEK, PGE Obrót, PGE Energia Odnawialna, PGE EJ1, PGE Ventures, PGE Centrum, PGE Nowa Energia, PGE Synergia, PGE Systemy, PGE Baltica and PGE Energia Ciepła), but it is ready to extend its coverage to other PGE Group companies.

Within the scope of procurement procedures conducted in 2020, 5,204 contractors submitted offers in the procurement system. The procedures resulted in contracts being awarded to 4,132 contractors. The vast majority of payments to external contractors were made within contractual deadlines. In the case of PGE SA, the share of timely payments exceeded 99.86%. In the case of other PGE Group companies, the shares of timely payments equalled respectively:

• PGE GiEK – 99.85%
• PGE Energia Ciepła – 97.07%
• PGE Energia Odnawialna – 95.21%
• PGE Dystrybucja – 98.44%
• PGE Obrót – 99.38%
• PGE Centrum – 96.52%
• PGE Dom Maklerski – 99.98% of the total.

This data proves that PGE Group has a responsible approach to building business relations with its suppliers.

There are 13,257 contractors in the procurement system database (as at December 31, 2020).

In view of the unique circumstances of the year 2020, it was particularly important to rely on efficient and open communication with current and potential business partners. In April 2020, PGE Group introduced the possibility to track the opening of bids online in its procurement procedures. This solution is aimed at maintaining the highest standards in the implementation of procurement procedures. In addition, PGE Group organised a series of online meetings with potential contractors interested in the execution of investment projects planned by the Group. The meetings concerned the tender for geotechnical tests for wind farms on the Baltic Sea and investments to be implemented by PGE Energia Ciepła. During the meetings potential and current contractors were able to familiarise themselves with the Company’s investment plans and discuss the principles of proper preparation for tender procedures.

The KOGENERACJA Wrocław CHP complex, a part of PGE Energia Ciepła, held a remote competitive dialogue based on video conferences with six consortia that submitted requests to participate in the tender for the construction of the Nowa Czechnica CHP plant in Siechnice. The participating consortia were represented by the following corporations: Siemens, RAFAKO, Mostostal Warszawa, Control Process, Mitsubishi Hitachi Power Systems Europe GmbH and Polimex Mostostal. The dialogue with potential contractors resulted in an exchange of comments and observations on the basis of which the subject of the contract was described. All companies taking part in the negotiations were invited to submit their bids for the construction of the Nowa Czechnica CHP in Siechnice. A unit fired with low-carbon gaseous fuel will replace the currently operated coal-fired unit.