Provision for liabilities and other charges divided into current and non-current portion 31.12.2016 31.12.2015 Non-current
635 488
625 388
Current
789 718
567 556
Closing balance
1 425 206
1 192 944
Change in provisions for liabilities and other charges
| for the period ended 31 December 2016 | Provision for non-contractual use of land | Provision for other claims | Provision for land reclamation | Provision for certificates of origin | Provision for CO2 emissions rights | Mine liquidation | Other | Total | |
|---|---|---|---|---|---|---|---|---|---|
| Opening balance | 189 429 | 60 456 | 55 409 | 250 024 | 193 034 | 124 441 | 320 151 | 1 192 944 | |
| Unwinding of discount and discount rate change | (3 272) | - | (5 539) | - | - | 3 484 | - | (5 327) | |
| Increase in provisions | 27 125 | 7 387 | 1 701 | 263 343 | 291 306 | - | 161 107 | 751 969 | |
| Provisions used | (171) | (16 987) | - | (237 684) | (197 691) | - | (13 566) | (466 099) | |
| Provision reversed | (9 820) | (9 509) | (1 678) | (521) | (1 465) | (17 737) | (7 551) | (48 281) | |
| Closing balance | 203 291 | 41 347 | 49 893 | 275 162 | 285 184 | 110 188 | 460 141 | 1 425 206 | |
| for the period ended 31 December 2015 | Provision for non-contractual use of land | Provision for other claims | Provision for land reclamation | Provision for certificates of origin | Provision for CO2 emissions rights | Mine liquidation | Other | Total | |
|---|---|---|---|---|---|---|---|---|---|
| Opening balance | 172 854 | 27 362 | 57 551 | 164 878 | 105 758 | - | 240 691 | 769 094 | |
| Acquisition of subsidiaries | - | 26 014 | 5 738 | 2 202 | - | 115 744 | 50 309 | 200 007 | |
| Unwinding of discount and discount rate change | (2 266) | - | (8 540) | - | - | 850 | - | (9 956) | |
| Increase in provisions | 29 819 | 10 671 | 660 | 227 768 | 193 412 | 7 847 | 45 470 | 515 647 | |
| Provisions used | (462) | (2) | - | (144 470) | (105 668) | - | (10 819) | (261 421) | |
| Provision reversed | (10 516) | (3 589) | - | (354) | (468) | - | (5 500) | (20 427) | |
| Closing balance | 189 429 | 60 456 | 55 409 | 250 024 | 193 034 | 124 441 | 320 151 | 1 192 944 | |
Provisions for liabilities are determined in reasonable, reliably estimated amounts. Individual provisions are recognized for projected losses related to court action brought against the Group. The amount recognized as a provision is the best estimate of the expenditure required to settle a claim. The cost of provisions is recognized under other operating expenses. A description of material claims and the related contingent liabilities has been presented in Notes 47.2, 47.5 and 47.6
Provisions for liabilities and other charges include mainly:
Provision for non-contractual use of land
Provision for claims of persons holding possession of real properties, arising from non-contractual use of land.
The provision for claims concerning non-contractual use of real properties is measured according to so-called staged approach and weighting, i.e. the probability of losing the dispute and necessity to fulfil the claim. Claims for non-contractual use of real property may be significant for the Group because of the number of properties used, but the Group is not able to estimate the maximum amount of compensation. Enea Group - in relation to term transmission corridors - estimated and included in provisions the compensations for non-contractual use of real properties on which the grid assets are located (power lines), for which no claims have yet been raised as at the reporting date.
Provision for land reclamation
After closing or filling a slag and ash dump, the Group is obliged to carry out appropriate land reclamation. As the Group has large unfilled dumps, land reclamation is planned for 2060. Future estimated costs of land reclamation were discounted to their current value using a discount rate of 3.20% (as at 31 December 2015 – 2.80%).
As at 31 December 2016 the provision amounted to PLN 49 893 thousand (as at 31 December 2015 it was PLN 55 409 thousand).
Provision for purchasing CO2 emissions rights
As at 31 December 2016 the provision for CO2 emissions rights amounted to PLN 285 184 thousand (as at 31 December 2015 it was PLN 193 034 thousand).
Provision for mine liquidation
Enea Group recognizes a provision for mine liquidation expenses, as required under applicable provisions. Key assumptions used to determine the cost of mine liquidation include assumptions regarding the useful life of the mine, the expected rate of inflation and long-term discount rates.The calculated amount of mine liquidation costs on 31 December 2016 amounts to PLN 110 188 thousand.
Other provisions
Other provisions relate mainly:
- wind farm Skoczykłody: Group estimated the value of shares in Eco-Power Sp. z o.o. and recorded provision for the difference between the price including the base amount of PLN 286 500 000,00 and value estimated in the model of Enea S.A. in the amount of PLN 129 000 thousand (Note 54).
- potential liabilities related to network assets resulting from differences in law interpretation - PLN 148 259 thousand (as at 31 December 2015 PLN 129 197 thousand),
- costs of using forest lands managed by State Forests - PLN 108 245 thousand (as at 31 December 2015 PLN 112 680 thousand),
- real property tax in Lubelski Węgiel Bogdanka S.A. PLN 32 456 thousand (as at 31 December 2015 PLN 23 881 thousand),
- ZUS claims regarding accident contribution in Lubelski Węgiel Bogdanka S.A. PLN 20 042 thousand (as at 31 December 2015 PLN 18 727 thousand)
- restoration of mining damages PLN 4 440 thousand (as at 31 December 2015 PLN 8 497 thousand).
