Grupa Azoty Puławy announced on Tuesday that the District Court in Lublin had suspended the proceedings against the company in the case lawsuit filed by the contractor for the construction of the coal block in Puławy. In December 2024, Polimex Mostostal withdrew from the contract.
The dispute concerns the contract for the construction of the BW100 coal unit at Grupa Azoty Puławy, concluded in 2019. The original completion date of the investment was planned for 2022. It was supposed to be one of the last new coal-fired power plants in Poland due to the withdrawal of state investors from coal plans in Ostrołęka and switching the target fuel to gas.
Both companies are listed on the stock exchange and both have experienced serious financial problems in recent years.
A lawsuit against a lawsuit
The press release from Grupa Azoty Puławy shows that the District Court in Lublin decided to suspend the proceedings initiated in January 2025 by the contractor of the contract for the construction of a coal block in Puławy, i.e. Polimex Mostostal.
The case stayed suspended until the conclusion of the earlier proceedings — in December 2024, Grupa Azoty Puławy filed a lawsuit against the contractor, demanding an award payment of nearly PLN 250 million in contractual penalties for delay in the implementation of the investment.
In April this year The District Court in Lublin decided that the company's case would be referred to mediation, and the parties were to appoint a mediator. The Court of Arbitration at the General Prosecutor's Office is competent to conduct such mediation (where the party to the dispute is a company with State Treasury shareholding). If mediation does not lead to a settlement, a normal trial will take place in court.
Read also: A company from the Azoty Group is going to the prosecutor's office. This concerns the contract for the construction of a coal block
Azoty Puławy announced in a press release that when Grupa Azoty Puławy withdrew from the contract – on January 17, 2025 – the delay in the implementation of the investment was 593 days. Moreover, during the commissioning work, further failures occurred, a the block did not achieve the parameters guaranteed by the contract. At the end of 2024, the contractor stopped commissioning work. After withdrawing from the contract, the parties conducted an inventory of the work completed so far.
“A solution that satisfies both parties”
Marcin Celejewski, president of the management board of Grupa Azoty and Grupa Azoty Puławy, pointed out that the company incurred significant capital expenditure related to the construction of a power unit based on coal fuel. “We hope that the possible mediations that the parties intend to conduct will allow us to find a solution satisfactory to both parties,” the president added in Tuesday's announcement.
The construction of the coal block began in Azoty in Puławy on the premises of the company's heat and power plant in 2019. The investment was to ensure 100 MW of electricity, 300 MW of heat and replace two worn-out coal blocks from the 1960s. The contract for the construction of the unit was worth PLN 1.16 billion net, and the total project budget was PLN 1.2 billion net. The original deadline for handing over the block was set for Q3 2022.
Azoty reported that the completion of the investment was repeatedly postponed by the contractor. In January 2025, Azoty Puławy terminated the unfinished part of the contract with Polimex Mostostal for the construction of the block and demanded, among other things, inventorying the work performed and providing missing documentation. They also demanded payment of over PLN 239 million in contractual penalties “for withdrawal from the contract for reasons attributable to the contractor.”
Polimex Mostostal considered this termination to be groundless and do not produce legal effects due to prior effective withdrawal from the contract “through the fault of the ordering party”. Moreover, the consortium called Azoty Puławy for payment the remaining remuneration resulting from the contract, i.e. over PLN 189 million.
Grupa Azoty Puławy – part of the Grupa Azoty Capital Group – is one of the largest producers of nitrogen fertilizers in Poland. Grupa Azoty – a joint-stock company in which the State Treasury holds 33%. shares – ranks second in the EU in the production of nitrogen and multi-component fertilizers, and also operates on the markets of products such as melamine, polyamide, OXO alcohols, plasticizers and titanium white.
Polimex Mostostal carries out engineering and construction investments for the energy, petrochemical, gas and environmental protection industries. 63.5 percent state-owned companies: Enea, Energa, PGE, Orlen Technologie – as investors acting jointly and in concert.
