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From Ownership by State Treasury to Taxation of Private Business in Times of Austerity: Remodelling Government's Rents from Production of Hydrocarbons in Poland by J. Górski This paper will be part of the OGEL special issue on International Taxation in the Energy Sector, more information here. About OGEL OGEL (Oil, Gas & Energy Law Intelligence): Focusing on recent developments in the area of oil-gas-energy law, regulation, treaties, judicial and arbitral cases, voluntary guidelines, tax and contracting, including the oil-gas-energy geopolitics. For full Terms & Conditions and subscription rates, please visit our website at www.ogel.org. Open to all to read and to contribute

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  Jędrzej Górski1 From ownership by state treasury to taxation of private business in times of austerity: Remodelling government's rents from production of hydrocarbons in Poland Abstract Especially after 2008, the vicious circle of surging public debt and surging expenditure with very little efforts to cut public spending in Poland forced the government to seek for new sources of revenue, including further privatisation of companies in energy sector. Since 2011, the hopes were also high for revenue bearing shale revolution. Those factors combined drew the government’s attention to still partly state-owned domestic giants engaged in mining/upstream operations, over which the treasury had been gradually losing control but still kept a significant equitystake therein. The initial idea was to impose higher exploitation royalties, firstly on copper and silver (since Poland is one of the world’s top producers of both) which happened in 2012, and then on gas and oil in order keep adequate level of economic rent from hydrocarbons’ exploitation, despite selling equity to mostly foreign investors. This article presents and critically assesses the reform of the Polish system of taxation of oil and gas upstream business of 2014 which is scheduled to fully enter into force in 2020.

                                                             1

PhD Candidate, the Chinese University of Hong Kong, Faculty of Law

1   

 

TABLE OF CONTENTS

1. 

Introduction ................................................................................................................. 3 

2. 

Privatisation of energy sector ...................................................................................... 4 

2.1. 

Business prior to WW2................................................................................................ 4 

2.2. 

Post-WW2 recovery and nationalisation ..................................................................... 6 

2.3. 

Commercialisation and privatisation period .............................................................. 11 

3. 

Overview of prior royalties........................................................................................ 14 

3.1. 

1932-1938 .................................................................................................................. 14 

3.2. 

1945-1991 .................................................................................................................. 15 

3.3. 

Proportional royalties 1991-2001 .............................................................................. 15 

3.4. 

Snake in the tunnel 2002-2011 .................................................................................. 16 

3.5. 

2012-2014 .................................................................................................................. 19 

4. 

New model ................................................................................................................. 19 

4.1. 

Fiscal pressure and shale delusion ............................................................................. 19 

4.2. 

Taxing the KGHM ..................................................................................................... 23 

4.3. 

Sui generis instruction on mining ususfruct price of 2013 ........................................ 25 

4.4. 

Surging fixed rates 2015-2020 .................................................................................. 28 

4.5. 

Special tax after 2020 ................................................................................................ 32 

5. 

Assessment ................................................................................................................ 34 

SCHEDULE A.  Reference table for nationalisation decisions issued 1946-1959 ................ 37  SCHEDULE B.  Reference table for exploitation fees 2002-2011 an after 2012 .................. 38  SCHEDULE C.  Reference table for exploitation fees starting from 2015............................ 39 

2   

  1. Introduction When the Government of Poland filed to the parliament a bill completely reshaping the model of the taxation the production of hydrocarbons in April 2014,2 the very basic premise of the proposal was that the level of the state’s economic-resource-rent would reach about 40 per cent. 3 However, the government departed from the truth by stating that the previous taxes ‘ do not guarantee, however, the state’s proper share in resource rent, meaning a share comparable with the one received by other states. According to the calculations of the Ministry of Finance, the current level of the state’s resource rent from hydrocarbons-exploitation-operations is about 21%. For example the level of state’s resource rent in UK, Norway or Australia is respectively about 62%, 72% and 56%.’4 In fact, the treasury’s economic resource rent from the production hydrocarbon now ranges from over 40 per cent per cent to even almost 80 per cent because of the equity that the treasury still keeps in all three major producers of hydrocarbons, which are all also listed at the Warsaw Stock Exchange. It implies that if the treasury eventually sells its remaining stake in the companies having upstream operations, which is the long-term plan, the overall resource rent will fall rather than rise, despite increasing taxes. However, this loss could have been compensated with a vengeance with a 40 per cent economic rent stemming from the taxation of completely new upstream operations, most likely brought to the country by North American business, having the capacity to exploit unconventional deposits which Polish upstream companies are lacking. Therefore, the second major premise of the reform was that despite the rise of hydrocarbon-related taxes the ‘the projected system of the exploitation of hydrocarbons shall also be competitive against other tax jurisdictions (investment incentive) coherent, transparent and possibly simple, especially in its initial phase, it shall also realize beyond-fiscal objectives, including effective and rational use of deposit resources and ensure stable economic growth of Poland. The creation of attractive conditions for investing in hydrocarbon sector in Poland is not without significance.’5 The aim of this article is to present the reform of the Polish system of taxation of oil and gas upstream business, and to assess the reform against how the above premises have been balanced. The first part of this article explains the changing ownership structure of Poland’s upstream business starting from (i) Subcarpathia region in mid-19th century being world’s oil-business cradle (in section 2.1), through (ii) times of centrally planned economy and full state-ownership in the People’s Republic of Poland (section 2.2), ending on (iii) the gradual privatisation of state-owned giants on the Warsaw Stock                                                              2

Parlamentary printed matters [2014] no. 2351 available at: http://www.sejm.gov.pl/sejm7.nsf/PrzebiegProc.xsp?nr=2351 accessed 10 February 2015 3

See: note 2 at 9 

4

See: note 2 at 5 

5

See: note 2 at 8 

3   

  Exchange (in section 2.3). The second part explains previous subsequent taxation models that is the (i) unification of pre-partition taxation systems in the inter-bellum period (in section 3.1), (ii) no taxation in the People’s Republic of Poland (in section 3.2), (iv) income-related proportional royalties in 1991-2001 period (in section 3.3), and (v) fixed rates in various forms commencing from 2002 (in sections 3.4 and 3.5). The third part presents the reform, including (i) its rationale (in section 4.1), (ii) flying a kite with similar reform of the taxation of the exploitation of copper and silver (in section 4.2), (iii) a conversion of civil-law contractual remuneration for deposits into a quasi-taxation in 2013 (in section 4.3), (iv) the increase of fixed rates for high-volume exploitation stating from 2014 (in section 4.4), and (v) the details of the complex reform which will enter into force in 2020 (in section 4.5). The article concludes with an assessment of the reform (in section 5). 2. Privatisation of energy sector 2.1. Business prior to WW2 The Subcarpathia region in Poland (a part of the Kingdom of Galicia and Lodomeria within the framework of Austria-Hungary between 1772 and 1918) is a cradle of the modern oil industry. It was privately run by mostly Polish grassroots entrepreneurs with technical background joined by Western investors until the post-WW2 nationalisation which took place in the People’s Republic of Poland. 6 The first-in-the-world commercial oil mine was opened by Ignacy Łaukasiewicz7 in Bóbrka8 as early as 18549 to be followed by the first-in-the-world commercial oil refinery in Ulaszowice near Jasło10 in 1856.11 While the existence of gas deposits had been well realised since at least 1853, deposits had not been documented until 1896, which resulted in only minor exploitation prior to WW1. 12 Meanwhile, the oil production steadily grew over the last quarter of the 19th century, jumping from 158 thousand barrels in 1875 to 2347 thousand barrels in 1900, in line with global trends (see:                                                             

6

See: Piotr Karnkowski Exploration and exploitation of oil and gas fields in Poland: A historical outline, [2007] 55 Geological Review (Przeglad Geologiczny) 12/1 1049-1059 at 1050-1052 7

Born 1822, died 1822. The inventor of, among others, (i) how to process a distillation of kerosene , (ii) modern kerosene lamp, (iii) modern street lamp, and (iv) design of oil wells. See: Ignacy Łukasiewicz’s profile on the website of the Ignacy Łukasiewicz Museum of the Oil and Gas Industry in Bóbrka (Muzeum Przemysłu Naftowego I Gazowniczego im. Ignacego Łukasiewicza w Bóbrce) available at http://www.bobrka.pl/en/ignacylukasiewicz/ accessed 1 February 2015 8

A village in Chorkówka Borough (Gmina Chorkówka), Krosno County (Powiat Krośnieński), Subcarpathian Region (Województwo Podkarpackie) 9

See: note 7, ibid.

10

Currently a suburb of Jasło, Jasło County (Powiat Jasielski), Subcarpathian Region (Województwo Podkarpackie) 11

See: note 7, ibid.

12

See: note 6 at 1050-1051

4   

  Figure 1.). Despite massive developments of oil industry elsewhere in the 2nd half of the 19th century, as of 1909 (when the region’s output peaked at 2 million tonnes constituting 5.2 per cent of the world’s total production) Subcarpathia region was still world’s third oil producer, only surpassed by the United States being second and the Russian Empire coming first.13 After the WW1, the oil industry remained private with about 75 per cent of the oil business in hands of foreign, mostly French and American business (see further section 3.1).14 The new discoveries of gas deposits made during the WW1 and directly thereafter between Jasło 15 and Krosno 16 and in Subcarpathian Foredeep17 led to large-scale gas exploitation commencing in early 1920s.18 Directly prior to WW2 the oil production in the region - as a result of the depletion of fields and a low number of new commercially viable discoveries – fell to 554 thousand tonnes in 1938 (see: Figure 2.) against 584 million cubic meter of gas produced in the same year.19 Figure 1. Annual oil production in Subcarpathian region in the third quarter of the 19th century20 80000 70000 60000 50000

Subcarpathia

40000

Russian Empire

30000

USA

20000 10000 0 1875

1880

1885

1890

1895

1900

                                                             13

See: note 6 at 1051; see also: Alison Frank (2011). Environmental, Economic, and Moral Dimensions of Sustainability in the Petroleum Industry in Austrian Galicia. Modern Intellectual History, 8, pp 171-191. doi:10.1017/S1479244311000102. at 172 14

See: Jacek Czuryło, Zbigniew Chlewiński, With oil through generations (Z Naftą przez pokolenia), Branch of the Association of Engineers and Technicians of Petrochemical Industry in Płock (Oddział Stowarzyszenia Inżynierów i Techników Przemysłu Chemicznegow Płocku) ISBN 83-915827-2-8 at 45, 49 15

See: note 10

16

See: note 8

17

See: note 6 at 1051

18

See: note 4 at ibid.; see also: note 14 at 47

19

See: note 4 at ibid.

20

Compiled base on: note 14 at 152

5   

  Figure 2. Annual oil production in Subcarpathian region in 20th century prior to WW221 2,500,000 2,000,000 1,500,000  thousand tonnes

1,000,000 500,000 0 1905

1907

1909

1938

2.2. Post-WW2 recovery and nationalisation Years directly following the WW2 witnessed rehabilitation of the damaged infrastructure and of the exploitation capacity accompanied by a crucial change to ownership structure of oil and gas industry in the light of gradual assumption of full powers over the country by the communist party. As far as only Subcarpatia is concerned, the yearly output jumped from 86 thousand tonne of oil and 115.1 million cubic meters of gas in 1945 to respectively 210 thousand tonnes and 235 million cubic meters in 1952 (see: Figure 3. and Figure 4.).22 Meanwhile, the nationalisation act was passed in 1946,23 resulting in over four hundred individual or collective expropriation decisions (orzeczenie) issued by relevant ministries (see: SCHEDULE A for reference),24 the last one of which issued in April 1959.25 In principle, the nationalisation was to be conducted for compensation 26 and covered enterprises operating, among others, in sectors such as (i) mining, including mining-related proprietary rights,27 (ii) oil and gas industry, including upstream, midstream and downstream,28 (iii) electricity including                                                              21

See: note 6 at 1051-1052

22

See: note 6 at 1051

23

Act of 3 January 1946 on the nationalisation by the State of the basic branches if the national economy (Ustawa z dnia 3 stycznia 1946 r. o przejęciu na własność Państwa podstawowych gałęzi gospodarki narodowej), Oficial Journal (Dziennik Ustaw) [1946] no 3 item 17 as amended with Decree of 20 December 1946 amending Act of 3 January 1946 on the nationalisation by the State of the basic branches if the national economy (Dekret z dnia 20 grudnia 1946 r. o zmianie ustawy z dnia 3 stycznia 1946 r. o przejęciu na własność Państwa podstawowych gałęzi gospodarki narodowej) , Oficial Journal (Dziennik Ustaw) [1946] no. 72 item 394 24

See: secondary legislation to the 1946 nationalisation act listed by on-line version of Polish Journal (Dziennik Ustaw), the Interne System of Legal Acts (Internetowy System Aktów Prawnych, ‘ISAP’), available at: http://isap.sejm.gov.pl/RelatedServlet?id=WDU19460030017&type=9&isNext=true, accessed 1 February 2015

25

See: 1946 Nationalisation Act article 3.1

26

See: 1946 Nationalisation Act article 3.1.A.1)

27

See: 1946 Nationalisation Act article 3.1.A.2)

28

See: 1946 Nationalisation Act article 3.1.A.3)

6   

  production, transportation and distribution,29 (iv) water supplies,30 (v) steel works,31 (vi) coking, (vii) sugar processing and refining,32 (viii) alcoholic beverages,33 (ix) textiles,34 (x) typography/printing,35 (xi) arms, 36 (xii) plants which employ more than fifty people on a shift, 37 (xiii) railway and air transportations of goods and people,38 and (xiv) telecommunications.39 The nationalisation was to be conducted without compensation in the case of industrial, mining, transportation, banking, insurance and trade enterprises previously owned by (i) 3rd German Reich and Free City of Danzig (Freie Stadt Danzig, Wolne Miasto Gdańsk), (ii) citizens thereof except for Poles,40 (iii) legal entities established therein,41 (iii) companies controlled by the citizens or public administration thereof,42 and (iv) persons who deserted to enemy.43 Thus, neither mining nor oil and gas industry (overlapping upstream-wise) was exceptional, ending up completely in hands of the state treasury. As to the legal form within which state-owned enterprises were about to operate, the pre-WW2 commercial code of 193444 remained in force and almost intact with regard to registered partnership and companies until 2000.45 However, till the change of 1989 it was dormant in practice. Instead, all pre-existing nationalised enterprises were to be transformed to, and all newly established state-owned enterprises were to be incorporated as ‘state enterprises’ (przedsiębiorstwa państwowe), being special legal persons of public law.46 The management of those entities was entrusted to one director and                                                             

29

See: 1946 Nationalisation Act article 3.1.A.5)

30

See: 1946 Nationalisation Act article 3.1.A.6)

31

See: 1946 Nationalisation Act article 3.1.A.8)

32

See: 1946 Nationalisation Act article 3.1.A.9)

33

See: 1946 Nationalisation Act article 3.1.A.10 and article 3.1.A.11

34

See: 1946 Nationalisation Act article 3.1.A.16)

35

See: 1946 Nationalisation Act article 3.1.A.17)

36

See: 1946 Nationalisation Act article 3.1.A.7)

37

See: 1946 Nationalisation Act article 3.1.B

38

See: 1946 Nationalisation Act article 3.1.C.1

39

See: 1946 Nationalisation Act article 3.1.C.2

40

See: 1946 Nationalisation Act article 2.1.a)

41

See: 1946 Nationalisation Act article 2.1.b)

42

See: 1946 Nationalisation Act article 2.1.c)

43

See: 1946 Nationalisation Act article 2.1.d)

44

See: Regulation of the President of Poland of 27 June 1934 Commercial Code (Rozporządzenie Prezydenta Rzeczypospolitej z dnia 27 czerwca 1934 r Kodeks handlowy.) Oficcial Journal (Dziennik Ustaw) [1934] no 57 item 502 as amended

45

Replaced with: Statute of 15 September 2000 Code of commercial companies (Ustawa z dnia 15 września 2000 r. Kodeks spółek handlowych) Official Journal (Dziennik Ustaw) [2000] no. 94 item 1037 46

See subsequent: Decree of 26 October 1950 on state enterprises (Dekret z dnia 26 października 1950 r. o przedsiębiorstwach państwowych) Official Journal (Dziennik Ustaw) [1950] no. 49 item 439 as amended with

7   

  employees’ council in each enterprise.47 The property possessed and managed by those enterprises was owned directly by state treasury rather than by those enterprises.48 Separate state enterprises engaged in oil and gas upstream operations were subject to a gradual consolidation by grouping those in unions (zjednoczenia).49 The Union of the Oil and Natural Gas Industry (Zjednoczenie Przemysłu Naftowego i Gazu Ziemnego) was established on 1 January 1945, and the Union of the Oil Industry in Warsaw (Zjednoczenie Przemysłu Naftowego w Warszawie) was established on 1 November 1958, renamed as the Union of the Oil Industry (Zjednoczenie Przemysłu Naftowego) on 4 September 1967.50 They were further unified in 1976 into one Union of the Oil and Gas Industry (Zjednoczenie Górnictwa Naftowego i Gazowniczego), 51 and finally on 1 September 1982 were merged into one state enterprise named Polish Oil Mining and Gas Industry (Polskie Górnictwo Naftowe Gazownictwo) – the PGNiG. At the time of creation, the PGNiG grouped 61 various self-sustainable plants and embraced almost all country’s gas and oil production within one entity.52 Meanwhile, upstream operations went beyond Subcarpathia53 and the yearly production of hydrocarbons peaked at 562 thousand tonnes of oil in 1974 (see: Figure 5.) and 7,5 billion cubic meters of natural gas in 1978,54 sliding in 1989 to respectively 161 thousand tonnes (see: Figure 6.) and 5.9 billion cubic meters (See: Figure 7.).

                                                                                                                                                                                           Act of 16 February 1960 amending the Decree of 26 October 1950 on state enterprises (Ustawa z dnia 16 lutego 1960 r. o zmianie dekretu z dnia 26 października 1950 r. o przedsiębiorstwach państwowych) Oficial Journal (Dziennik Ustaw) no. 9 item 57; Act of 25 September 1981 on state enterprises Ustawa z dnia 25 września 1981 r. o przedsiębiorstwach państwowych) Official Journal (Dziennik Ustaw) [1981] no. 24 item. 122 47

See: 1981 Act on State Enterprise article 31

48

See: 1981 Act on State Enterprise article 38

49

See: PGNiG’s Prospectus, Chapter IV, available at http://www.pgnig.pl/documents/10184/251886/04_ProsEmisPGNiGRozIVStr89-110.pdf/fd7d68b0-7890-40df8a3d-a89f251f3ef5 at 91 50

See: note 49

51

See: ibid.

52

See: ibid.

53

See: note 6 at 1056-1058

54

See: note 14 at 65

8   

  Figure 3. Annual oil production in Subcarpathian region prior and after WW255 600 500 400 300

 thousand tonnes

200 100 0 1938

WW2

1945

1952

Figure 4. Yearly oil gas production in Subcarpathian region prior and after WW256 600 500 400 300

million cubic meters

200 100 0 1938

WW2

1945

1952

                                                             55

Figure compiled by the authors based on: note 6 at 1051

56

Figure compiled by the authors based on: note 6 at 1051

9   

  Figure 5. Annual yearly oil production in Poland 1945-198957

Figure 6. ‘The figure below shows changes in exploitable anticipated economic resources and production of oil in Poland in the years 1989-2013’58

                                                             57

See: Andrzej Szczęśniak, Exctraction of Oil in Poland (Wydobycie Ropy Naftowej w Polsce ) Szczesniak.pl 23 January 2007 available at: http://szczesniak.pl/wydobycie_ropy_Polska?order=title&sort=asc accessed 3 February 2015 58

See: http://geoportal.pgi.gov.pl/surowce/energetyczne/ropa_naftowa accessed 5 February 2015

10   

  Figure 7. ‘The figure below shows changes in domestic exploitable anticipated economic resources and production of natural gas in Poland in the years 1989-2013’59

2.3. Commercialisation and privatisation period The transformation of 1989 did not bring any significant changes to the ownership structure of the upstream sector for at least a decade from then. While new private foreign investors commenced exploration of potentially viable gas and oil deposits after 1993, it was the still state-owned de facto monopolistic PGNiG to make largest discoveries. The later privatisation craved for prior restructuring of state-owned giants.60 State enterprises first had to acquire ownership of assets which they had previously managed on behalf of state treasury 61 and had to be commercialised, meaning the conversion of entity’s form from state enterprises to commercial companies of private law.62 The PGNiG was registered as a joint-stock company on 30 October 1996, allowing the subsequent creation of one mid-stream/holding company, plus one upstream subsidiary and fourth downstream subsidiaries, and it was subjected to further internal transformations thereafter.63 No equity in the PGNiG was privatised until 2005 when the company went partly public on Warsaw Stock Exchange                                                              59

See: http://geoportal.pgi.gov.pl/surowce/energetyczne/gaz_ziemny accessed 5 February 2015

60

See: note 14 at 101

61

See generally: Act of 29 September 1990 amending the act on the management of land on and expropriation of real estate (Ustawa z dnia 29 września 1990 r. o zmianie ustawy o gospodarce gruntami i wywłaszczaniu nieruchomości). Official Journal (Dziennik Ustaw) [1990] np 79 item 464 62

See generally: Act of 30 Septmber 1996 on cemmercialisation and privatisation of state enterprises (Ustawa z dnia 30 sierpnia 1996 r. o komercjalizacji i prywatyzacji przedsiębiorstw państwowych) Official Jounral (Dziennik Ustaw) [1996] no. 118 item. 1561 63

See: 49 at 92

11   

  on 23 September that year. As of January 2015, the state treasury kept 72.4 per cent of the equity, while the rest was hold and/or traded by private investors (See: Figure 8.).64 As of 2014, the PGNIG was the second largest company in Poland by revenue, amounting to 32.120 billion PLN.65 Other state-owned hydrocarbon-related giants underwent similar restructuring. They got involved in upstream operations later than the PGNiG, and mostly not competing with it. The PKN (Polish Oil Consortium – Polski Koncern Naftowy) was established on 7 September 1998, later renamed as the ORLEN, merging the largest network of pumping stations (the CPN, the Centre of Oil Products, Centrala Produktów Naftowych, operating since January 1945) and the country’s largest oil refinery located in Płock which has been processing mostly Russian oil since 1959.66 In turn the LOTOS holding was gradually built upon the second largest refinery located in Gdańsk (operating since 1976 and processing mostly Russian Oil and only initially the oil from Middle East).67 The ORLEN first went public in 1999, leaving 27.52 per cent of the equity in hands of the treasury as of January 2015.68 The ORLEN Upstream was established in April 2006 with view to explore deposit in Poland and abroad, focusing in recent years on shale formation and it purchased Canadian upstream company TriOil Resources Ltd. in 2013.69 The LOTOS first went public in 2005, leaving 53.19 per cent of the equity in hands of the treasury as of January 2015 (see: Figure 8.). 70 The LOTOS’s subsidiary, LOTOS Petrobaltic, has been conducting upstream off-shore operation in the Baltic Sea since 1960s and now also has minor operation in Norway and Lithuania.71 In terms of revenue for 2014, ORLEN went first (113.853 billion PLN) and LOTOS came fifth (28.597 billion PLN) in the country.72

                                                             64

See: PGNiG’s corporate site available at: http://www.pgnig.pl/relacje-inwestorskie/informacjegieldowe/akcjonariat accessed 3 February 2015 65

See: http://www.forbes.pl/100-najwiekszych-firm-w-polsce-2014,ranking,175066,1,1.html 3 February 2015

66

See: ORLEN’s corporate site available at: http://www.orlen.pl/EN/Company/OurBackground/Pages/PKNOrlenBackground.aspx accessed 3 February 2015

67

See: LOTOS’s corporate site available at: http://www.lotos.pl/153/poznaj_lotos/grupa_lotos/historia accessed 3 February 2015 68

See: ORLEN’s corporate site available at http://www.orlen.pl/PL/RelacjeInwestorskie/Gielda/StrukturaAkcjonariatu/Strony/default.aspx accessed 3 February 2015 69

See: ORLEN’s corporate site available at: http://www.raportroczny.orlen.pl/raport_pl_wydobycie_2013 accessed 3 February 2015 70

See: LOTOS’s corporate site available at: http://inwestor.lotos.pl/183/spolka/struktura_kapitalu_akcyjnego accessed 3 February 2015 71

See: LOTOS’s corporate site available at: http://www.lotos.pl/148/poznaj_lotos/dzialalnosc_spolki/wydobywcza accessed 3 February 2015

72

See: note 53

12   

  By comparison, the KGHM Polish Copper (the KGHM Polska Miedź, or the KGHM), one of the world’s top copper and silver producers went public 1997 and, as of January 2015, treasury still kept 31.79 per cent of its equity (see: Figure 8. - on the analogies between taxation of the production of copper, silver and hydrocarbons, see further section 4.2). 73 In 2014, among country’s largest companies by revenue, the KGHM came sixth, generating 24.110 billion PLN.74 As a result of shrinking equity in the strategic and profitable previously entirely state-owned enterprises, the Ministry of Treasury (Ministerstwo Skarbu Państwa) soon faced the problem of how to control these entities anyway. The issue was, to some extent resolved with the very controversial statutes on so-called treasury’s golden share of 200575 and subsequently of 2010,76 the latter of which allows state treasury to block the decisions (such as resolution of boards) of some strategic companies such as (i) disposing/selling infrastructure-related assets,77 (ii) dissolution, 78 (iii) ceasing the use of infrastructure-related

assets,

79

(iv)

changing

objectives

of

those

companies,

80

(v)

selling/leasing/encumbering enterprises (collection of assets) which belong to these companies,81 (vi) adopting long-term strategies, 82 and (vii) relocating companies’ headquarters abroad. 83 Disputes arising under this stature are settled by administrative courts,84 and activities of such companies are monitored by state treasury’s proxies permanently delegated to these companies.85 The list of strategic

                                                             73

See KGHM’s corporate page available at: http://www.kghm.pl/index.dhtml?category_id=178 accessed 3 February 2015 74

See: note 53

75

Act of 3 June 2005 on exceptional rights of state treasury and on their execution in commercial companies with a significant importance for public order or public security (Ustawa z dnia 3 czerwca 2005 r. o szczególnych uprawnieniach Skarbu Państwa oraz ich wykonywaniu w spółkach kapitałowych o istotnym znaczeniu dla porządku publicznego lub bezpieczeństwa publicznego)

76

See: Act of 18 March 2010 on exceptional righ of the minister relevant for matters of treasury and on their execution in some commercial companies or capial groups operating in sectors of electricity-energy, oil and gas fuels (Ustawa z dnia 18 marca 2010 r. o szczególnych uprawnieniach ministra właściwego do spraw skarbu Państwa oraz ich wykonywaniu w niektórych spółkach kapitałowych lub grupach kapitałowych prowadzących działalność w sektorach energii elektrycznej, ropy naftowej oraz paliw gazowych) Official Journal (Dziennik Ustaw) [2010] no. 65 item 404

77

See: note 76 article 2 section 1

78

See: note 76 article 2 section 2.1)

79

See: note 76 article 2 section 2.2)

80

See: note 76 article 2 section 2.3)

81

See: note 76 article 2 section 2.4)

82

See: note 76 article 2 section 2.5)

83

See: note 76 article 2 section 2.5)

84

See: note 76 article 2 section 6.1) 

85

See: note 76 article 2 section 5.2)

13   

  infrastructural assets is secret as is the list of companies having such proxies.86 Given, however, that the golden share act of 2010 superseded the golden share act of 2005 – which had overtly covered the PGNiG, the ORLEN and the LOTOS (the KGHM was dropped in 2008) 87 – one can reasonably believe that the at least the PGNiG, the Orlen and the LOTOS are subjected to the new regulation. Figure 8. Treasury’s state in selected publicly traded companies as of January 201588   80 70 60 50 40 30 20 10 0

Treasury's…

PGNiG ORLEN LOTOS KGHM

3.

Overview of prior royalties

3.1. 1932-1938 Like in other fields of regulation, in the inter-bellum Poland, the mining did not meet a complex country-wide legislation until 1930s, when the first post-partition (1795-1918) uniform mining law entered into force in 1932, 89 superseding previously binding mining laws of Austria-Hungary, 2nd German Reich and the Russian Empire.90,91 Private property rights which had been granted under                                                              86

Act of 26 April 2007 on crisis management. (Ustawa z dnia 26 kwietnia 2007 r. o zarządzaniu kryzysowym) Official Journal (Dziennik Ustaw) [2007] no. 89 item 590 article 6b secion 7.1

87

See: Official Journal (Dziennik Ustaw) [2008] no. 192 item 1184; Official Journal (Dziennik Ustaw) [2007] no. 178 item 1251; Official Journal (Dziennik Ustaw) [2006] no. 19 item 145; Official Journal (Dziennik Ustaw) [2005] no. 260 item 2174; 88

Compiled based on companies’ corporate sites, see: notes 64, 68, 70, 73

89

Regulation of the President of Poland of 29 November 1930 – Mining Law (Rozporządzenie Prezydenta Rzeczypospolitej z dnia 29 listopada 1930 r. - Prawo górnicze), Official Jounral (Dziennik Ustaw) [1930] no. 85 item 654 as amended (a regulation with a force of a statute that is a primary legislation, in force 1 January 1932)

90

See: 1930 Mining Law article 318

91

For the details of the mining laws of semi-sovereign form of Polish statehood like the Duchy of Warsaw (subjected to Napoleonic France, 1807-1815) and the Congress Poland (Kingdom of Poland subjected to Russian Empire, 1815-1867) see generally: Zbigniew Filipiak, Andrzej Gaca, Law of real-estate-ownership in the context of provisions of mining laws of 1817 and 1870 in the Kindom of Poland (Prawo własności nieruchomości w obliczu regulacji prawa górniczego w Królestwie Polskim z 1817 i 1870 roku) [2012] Studia Iuridica Toruniensia 10 245, available at: https://repozytorium.umk.pl/bitstream/handle/item/1319/SIT.2012.013,Filipiak,Gaca.pdf?sequence=1 accessed 1 February 2015

14   

  previous laws were fully respected under the new law. 92 However, beyond that – in contrast to other deposits – exploration and production of gas and oil remained regulated according to previous acts93 and particular region-specific secondary legislation on royalties is now unavailable for analysis.94 3.2. 1945-1991 A number of ad hoc decrees, which amended the 1930 Mining Law directly after the WW2 to extend treasury ownership over more types of deposits, did not cover gas or oil at all.95 Nonetheless, a lack of clear regulation (regulation of royalties included) seems to be of no issue in the conditions of post-war recovery in a planned and gradually nationalised economy. All operations were conducted by and all revenue accrued to the government anyway. After a few years, the 1953 Mining Law96 eventually covered hydrocarbons, cancelled all previous private proprietary rights to deposits97 and remained tacit as to the royalties because there was no private mining business left at the time. 3.3. Proportional royalties 1991-2001 The legal framework for running private mining business was non-existent until 1991 when separate concessions for exploration and exploitation of deposits were established under amended 1953 Mining Law.98 The concession fees could have been set in the course of open tenders99 but did not have to, and specific rules on how to determine those fees did not exist. An exploitation fee could have been

                                                             92

See: 1930 Mining Law article 308

93

See: 1930 Mining Law article 315

94

In the sense that it was no digitalised and searching for hard copies in archives would go beyond the scope of argument of this article.

95

See: Decree of 8 January 1946 amending mining law (Dekret z dnia 8 stycznia 1946 r. o zmianie prawa górniczego), [1946] no. 2 item 15; Decree of 3 February 1947 partly amending mining law (Dekret z dnia 3 lutego 1947 r. o częściowej zmianie prawa górniczego) Official Journal (Dziennik Ustaw). [1947] no. 24 item 93

96

State Council’s Decree of 6 May – Mining Law (Dekret Rady Państwa z dnia 6 maja 1953 r. Prawo Górnicze).Official Journal [1953] no. 29 item. 113 97 See: 1953 Mining article 140 98

See: 1953 Mining Law as amended with Official Journal (Dziennik Ustaw) [1991] no. 31 item 128 article 12b. The first very general provisions on prospection and exploitation concession were included in the first act sketching the framework of free-market economy but those regulations were insufficient to allow conducting those activities by private business. See: Act of 23 December 1988 on economic activity (Ustawa z dnia 23 grudnia 1988 r. o działalności gospodarczej) Official Journal (Dziennik Ustaw) [1988] no. 41 item 324 article 11.1

99

See: See: 1953 Mining Law as amended with Official Journal (Dziennik Ustaw) [1991] no. 31 item 128 article 12i

15   

  set up in the secondary legislation at up to 10 per cent of the price of sold minerals.100 In the case of gas and oil, it was set up at 6 per cent.101 The initial provisions of the 1994 Mining Law,102 which had been tailored for market economy, along with accompanying secondary legislation, did not change those principles keeping proportional revenue-related fees at 6 per cent of sales price in the case of gas and oil.103 The major conceptual but not economic change, however, was that under the 1994 Mining Law exploration and exploitation concessions were split into purely administrative permits still called concessions (koncesje) and civillaw agreements on the establishment of mining usufruct (użytkowanie górnicze) strictly linked to those concessions. Since then, the discretionarily determined remuneration was to be paid for the mining usufruct, in addition to both (i) insignificant administrative fee for the exploration concession, and (ii) 6 per cent exploitation fee.104 3.4. Snake in the tunnel 2002-2011 Major changes to the 1994 Mining Law of 2001105 replaced revenue-related proportional fees with fixed fees per production unit. The rates were to be determined in secondary legislation, but within the range delineated in primary legislation with minimum and maximum thresholds subjected to annual automatic indexation. Since then, the actual rates remained pretty steady for a decade (see: Figure 9., Figure 10., Figure 11., and the a detailed breakdown and reference to legislation provided for in SCHEDULE B.) In addition, since 2006, the administrative fees for exploration concessions were linked to the area of exploration and set up at PLN 100 per square kilometre of exploration area

                                                             100

See: See: 1953 Mining Law as amended with Official Journal (Dziennik Ustaw) [1991] no. 31 item 128 article 12ł 101

See: Regualtion of the Council of Ministers of 8 November 1991 on exploitation fees for exploitation of minerals from deposits (Rozporządzenie Rady Ministrów z dnia 8 listopada 1991 r. w sprawie opłaty eksploatacyjnej za wydobywanie kopalin ze złóż) Official Journal (Dziennik Ustaw) [1991] no 105 item. 455 article 2.1.3) 102

See: The act of 4 February 2004 – Mining and geological law (Ustawa z dnia 4 lutego 1994 r. - Prawo geologiczne i górnicze) Official Journal (Dziennik Ustaw) [1994] no. 27 item 96

103

See: Regulation of the Council of Ministers of 23 September 1994 on fees for activities conducted based on geological and mining law(Rozporządzenie Rady Ministrów z dnia 23 sierpnia 1994 r. w sprawie opłat za działalność prowadzoną na podstawie przepisów Prawa geologicznego i górniczego) Official Journal (Dziennik Ustaw) [1994] no. 92 item 430 article 1.1.7) 104

See: 1994 Mining Law article 7

105

See: Act of 27 July 2011 amending geological and mining law (Ustawa z dnia 27 lipca 2001 r. o zmianie ustawy - Prawo geologiczne i górnicze) Official Journal (Dziennik Ustaw) [2001] no.110 item 1190

16   

  covered with the concession (subject to annual indexation).106 The pricing of the mining usufruct rights (to conduct either exploration works or exploitation works) remained unregulated. Figure 9. Exploitation fee [PLN] for oil [thousand tonnes] 2002-2011.107

80 60 MIN

40

actual

20

MAX 0 20022003 2004

2005 2006

2007 2008

MIN 2009 2010 2011

   

                                                             106

See: 1994 Mining Law {as emended with Official Journal (Dziennik Ustaw)] [2005] no. 90 item 758} article

85 section 3.1.a) 107

See: SCHEDULE B

17   

  Figure 10. Exploitation fee [PLN] for natural gas [thousand cubic meters] 2002-2011.108

6 5 4 3

MIN

2

actual

1

MAX

0 2002 2003

2004 2005

2006 2007

2008 2009 2010 2011

MIN

    Figure 11. Exploitation fee [PLN] for methane-rich natural gas [thousand cubic meter] 2002-2011.109

15 10 MIN 5

actual MAX

0 20022003 2004

2005 2006

2007 2008

MIN 2009 2010 2011

 

                                                             108

See: SCHEDULE B

109

 See: SCHEDULE B 

18   

  3.5. 2012-2014 The 2011 Mining Law, in force since January 2012,110 scratched minimum and maximum exploitation fees, leaving the determination of exact exploitation fees to the primary legislation, subject to annual indexation.111 Statutory rates were equal with the actual rates set up in the secondary legislation for 2011. After indexation, the fees in 2014 amounted to (i) PLN 6.38 for thousand cubic meters in the case of methane-rich natural gas, (ii) PLN 5.31 per thousand cubic meters in the case of natural gas, and (iii) PLN 37.73 per tonne of crude oil.112

In the case of exploration, analogically, the area-related

one-off administrative fee for exploration concession was not increased, and after indexation it amounted to PLN 111.72 per square kilometre in 2014 for any deposit except for coal, uranium ore and lignite, that is including hydrocarbons. 113 The determination of fees for the establishment of mining usufruct remained unclear in the case no open tenders were called, until first semi-official sui generis guidelines were issued by the government in 2013 without any legal basis (see further section 4.3).114 4. New model 4.1. Fiscal pressure and shale delusion Especially after 2008, the vicious circle of surging public debt (see Figure 12.) and surging expenditure with very little efforts to cut public spending forced the government to seek for new sources of revenue. The constitutional cap of public debt set at 60 per cent of country’s GDP even forced the government to nationalise a large portion of private pension funds (to the extent that those private funds had been obliged to invest in treasury bonds) worth over PLN 159 billion in December 2013, in order to prevent a Polish ‘fiscal cliff,’ whereby the budget would have had to be balanced overnight.115 Meanwhile, politicians and the public were tantalised to believe in a revenue-bearing                                                              110

See: Act of 9 June, 2011 Geological and Mining Law ( Ustawa z dnia 9 czerwca 2011 r Prawo Geologiczne i Górnicze) Official Journal (Dziennik Ustaw) [2011] no. 163 item 981 111

See: 2011 Mining Law article 133

112

ee: 2011 Mining Law, The Annex, as mended with Polish Monitor (Monitor Polski) [2012] item 902, Polish Monitor (Monitor Polski) [2013] item 721, Polish Monitor (Monitor Polski) [2014] item 705

113

See: note 112

114

Principles of the determination of the compensation for mining usufruct of 27 February 2013 (Zasady ustalania wynagrodzenia z tytułu użytkowania górniczego z dnia 27 lutego 2013 r.) available at: http://www.mos.gov.pl/g2/big/2013_02/64b6c7209c160caf7605d112560e5761.pdf accessed 6 February 2015 115

See generally: The act of 6 December 2013 amending some acts in relation to determination principles of the distribution of pensions from funds kept on open pension schemes.(Ustawa z dnia 6 grudnia 2013 r. o zmianie niektórych ustaw w związku z określeniem zasad wypłaty emerytur ze środków zgromadzonych w otwartych funduszach emerytalnych) Official Journal (Dziennik Ustaw) [2013] item. 1717  

19   

  shale rush after the US Department of Energy, the Office of Energy Analysis had revealed some extremely optimistic data in April 2011.116 The hopes were high to the extent that, during his second exposé on 18 November 2011, Donald Tusk announced that higher exploitation royalties would be imposed, firstly on copper and silver (traditionally exploited in Poland in huge volumes), and then on shale gas. He also proposed that revenue generated from shale gas could be designated for the nation’s pension fund, following the Norwegian example.117 Those factors combined drew the government’s attention to still partly state-owned domestic giants engaged in upstream operations, over which the treasury had been gradually losing control but still kept a significant equity stake therein (as discussed in section 2.3). The Ministry of Treasury was reminded - in the general ambit of shale rush – that not only shale-related upstream operations but any upstream operations are profitable indeed. The first result of that was pressing on boards of many state-owned enterprises to pay out higher dividends, the vast majority of which would still go to state treasury. 118 In the upstream sector, it pertained to the PGNiG (see: Figure 13.) and the ORLEN (see: Figure 14.) but it was still a drop in the ocean against the budgetary needs.                                                              116  ‘The study titled the ‘World Shale Gas Resources: An Initial Assessment of 14 Regions Outside the United States ’ fprepared by the subcontractor, the Advanced Resources International Inc. covered 7 Western-European countries (France, Germany, Netherlands, Sweden, Norway, Denmark, and United Kingdom), Poland and three other Eastern-European countries/regions (Lithuania, Kaliningrad/Russia, Ukraine). Eleven basins in twelve analysed European countries were reported to have 73.25 trillion cubic meters (tcm) of risked gas in-place and 17.67 tcm of risked technically recoverable resources against 32 basins in all 48 analysed countries over the world showing in total 623.42 tcm of risked gas in-place and 163.10 tcm of risked technically recoverable resources. The analysed European resourced constituted 11.75 percent and 10.84 percent of the analysed world’s total of respectively risked gas in place and risked technically recoverable gas. According to that study, Poland had the largest shale gas deposits among analysed European countries. It was reported to have 22.43 tcm of risked gas in-place, of which 5.29 tcm were technically recoverable. For comparison, all 7 Western-European countries showed respectively 42.61 tcm and 10.53 tcm, and all EasternEuropean countries including Poland showed 30.64 tcm and 7.13 tcm. Polish resources were to constitute - of respectively risked gas in place and risked technically recoverable gas - 73.2 and 74.19 percent of the Eastern Europe’s total and 30.62 and 29.93 percent of the Europe’s total. Suppose that the future domestic consumption of natural gas in Poland were 15.8 billion cubic meters (bcm) as it was in 2012, the 5.29 tcm would be an equivalent of almost 335 years of cumulative gas consumption in the Polish market. Together with the conventional recoverable fields estimated at about 145 bcm, it would be an equivalent of about 344 years. Had those large numbers been accurate, it would have caused a revolution for the domestic and regional natural gas market. Had those large numbers been accurate, Poland - currently being 6070 percent dependant on gas imports - would have turned to a natural gas exporter to other Central-European countries. The Polish economy would have been earning on energy carriers instead of spending money on imports.’ See: Jędrzej Górski, Sławomir Raszewski, Energy Security or Energy Governance? Legal and Political Aspects of Sustainable Exploration of Shale Gas in Poland, (2014) 12 OGEL 3 at 4.5 (footnotes omitted) 117

See: note 116 at 38

118

Press reported, that the government had even planned to force state-owned enterprise, including the PGNiG in mid 2013 (see: http://www.forbes.pl/pzu-pko-bp-i-pgnig-wyplaca-zaliczkowa-dywidende,artykuly,158100,1,1.html accessed 5 February 2015). Although, under Polish commercial code {Official Journal (Dziennik Ustaw). [2000] no. 94 item 1037 as amended}, it is the shareholders’ general meeting (walne zgromadzenie akcjonariusz) to decide on the dividend but still it is the executive board (zarząd) to propose it (see: Commercial Code article 348).

20   

  Moreover, since the very first predictions about Poland’s shale potential, it had also been obvious that no revenue from shale oil or gas exploitation will accrue to the treasury in the form of dividends because those were only foreign, mostly North-American upstream companies to have the required technology. 119 Government’s attempts to develop a kind of shale cluster combining domestic upstream industry and academia were unsuccessful.120 Nonetheless – even if they had not failed, those attempts were more strategic than fiscal given that the ultimate long-term goal is to privatise the treasury’s all remaining stake in commercial entities. That’s basically how a gun was put by different factors at the government’s head and a complex remodelling of government's rents from exploitation of hydrocarbons in Poland from an ownership by treasury to higher taxation of private investors became indispensable.

                                                             119

‘First exploration licences for unconventional gas were granted to two domestic firms that is Lotos (oil, mostly downstream), and Polish Petroleum and Gas Mining (PGNiG) (conventional gas and oil, mostly upstream) as early as in 2001 but those did not have a technology to commence exploration works at that time. More licences have been gradually granted since 2007 to reach the total number of about 100 at the turn of 2013/2014. Some limited exploration works were initiated and a few wells were drilled as early as in 2010 so there had been some interest in Polish shale deposits even prior to the publication of the optimistic report by the US Department of Energy. Since then, exploration works have been booming all over the country. As for December 2013, of 223 licences granted for the exploration of hydrocarbons (no separate data for gas and oil is easily accessible) 85 allowed the exploration of both conventional and unconventional hydrocarbons (shale, tight) and 14 allowed the prospection of unconventional deposits only. Among foreign firms that directly or indirectly held licences as for December 2013 were, for instance, BNK Petroleum (California), Chevron (California), Cuadrilla (UK), ENI (Italy), Exxon Mobil (Texas), Marathon Oil (Texas), San Leon Energy (Ireland), Talisman Energy (Alberta). However, the largest American players actually withdrew from prospection works even though they still held some exploration licences as for December 2013. Some tried to explain the withdrawal of Exxon Mobil in June 2012 with its new investments in Russia and suggested that discontinuation of the prospection in Poland might have been traded for more favourable treatment by the Russian government. However, in May 2013 Talisman and Marathon Oil withdrew from Poland too. The former vaguely justified it with strategic focus on North America and Asia while the latter openly admitted that it had not found commercially viable shale gas deposits. September 2013 brought speculations that Chevron would have left Poland by the end of that calendar year but as for mid-January 2014 it did not.’ See: Jędrzej Górski, Sławomir Raszewski, Energy Security or Energy Governance? Legal and Political Aspects of Sustainable Exploration of Shale Gas in Poland, (2014) 12 OGEL 3 at 9,10 (cross-references omitted) 120

‘A number of low-significance soft agreements/letters of intent have been concluded. For instance a framework agreement on co-operation in the field of prospection and future exploitation between the PGNiG, KGHM (exploitation of copper, silver), PGE (electricity generation), Tauron (electricity generation) and Enea (electricity generation) was signed in July 2012 but it expired in December 2013. Also, a scientific consortium of PGNiG, Orlen, Lotos, the AGH University of Science and Technology, the Warsaw University of Technology, and the Gdańsk University of Technology focusing on new methods of exploitation of shale rocks was established in November 2012. Immediately after the first-mentioned agreement between domestic firms had expired, the PGNiG announced signing a new memorandum of co-operation – this time with Chevron. Assuming that the co-operation between all those domestic state-influenced players was informally dictated by the government, all efforts to develop a kind of Polish shale cluster without the US capital and know-how actually turned out to be a complete fiasco.’ See: Jędrzej Górski, Sławomir Raszewski, Energy Security or Energy Governance? Legal and Political Aspects of Sustainable Exploration of Shale Gas in Poland, (2014) 12 OGEL 3 at 10 (cross-references omitted)  

21   

  Figure 12. Treasury’s debt in billion PLN and the ratio of domestic to foreign debt.121 yellow - domestic debt (dług krajowy) grey - foreign debt (dług zagraniczny) ▲ratio of domestic to foreign debt

Figure 13. Total dividends in thousand PLN (not available for ORLEN)122

6000000 5000000 4000000 3000000

PGNIG

2000000

LOTOS

1000000

KGHM

0 PGNIG

                                                             121

See: Website of the Ministry of Finance, available at: http://www.finanse.mf.gov.pl/web/wp/zadluzenieskarbu-panstwa accessed 5 February 2015 122

Compiled by the authors based on corporate sites of companies.

22   

 

Figure 14. Dividends as a percentage of profit (not available for PGNiG).123

100 80 60

ORLEN

40

LOTOS

20

KGHM

0 2005 2006

2007 2008

2009 2010

ORLEN 2011 2012 2013

4.2. Taxing the KGHM124 Instead of oil and gas, it was the copper and silver and the KGHM as their sole producer to go over the top first. Previously, the exploitation and production of copper and oil had only been encumbered with the exploitation fee per tonne of copper ore, given that silver is also extracted from copper ore. Just like in the case of gas and oil, the actual exploitation fee was determined in (i) secondary legislation within thresholds set up in primary legislation in 2002-2011 period, and (ii) primary legislation thereafter (see: Figure 15.). The new system of taxation set up for copper and silver was adopted in March 2012 and has been effective since April 2012. 125 It was a pretty dark preview of how the fiscal environment for shale would look like. The general idea was that the fiscal model would depart from (but not replace) fixed rates per unit in favour of a percentage of income from sales whereby the percentage would be variable and would depend upon the floating market price of a given mineral. Complicated formulas have been adopted, which take into consideration the London Metal

                                                             123

 Compiled by the authors based on corporate sites of companies. 

124

This section is based and further develops: Jędrzej Górski, Sławomir Raszewski, Energy Security or Energy Governance? Legal and Political Aspects of Sustainable Exploration of Shale Gas in Poland, (2014) 12 OGEL 3 section 7.2 at 38-40

125

See: Statute of 2 March 2012 on the Taxation of Exploitation of some Natural Deposits (Ustawa z dnia 2 marca 2012 r. o podatku od wydobycia niektórych kopalin), Oficial Journal [2012] item 362

23   

  Exchange Daily Official and Settlement Price for copper and the London Silver Fixing published by the London Bullion Market Association as reference prices, to read as follows: ‘Article 6. Section 1. The quantity of copper and silver contained in the concentrate shall be the basis for the taxation. (…) Article 7. Section 1. The amount of monthly tax shall the sum of the multiplied: 1) copper quantity in tonnes by the tax rate specified in Section 2 or 3, and 2) silver quantity in kilogrammes by the rate specified in section 4 or 5 2. If the average price of copper exceeds PLN 15,000 per tonne, the tax rate shall be determined based on the following formula: tax rate = 0,033 x average copper price + (0,001 x average copper price)2,5 – whereby the maximum tax rate shall be PLN 16,000 per tonne. 3. If the average price of copper does not exceed PLN 15,000 per tonne, the tax rate shall be determined based on the following formula: tax rate = (average copper price – PLN 12,000) x 0,44 – whereby the minimum tax rate shall be 0.5% of the average copper price. 4. If the average silver price exceeds PLN 1,200 per kilogram, the tax rate shall be determined based on the following formula: 4

tax rate = 0,125 x average silver price + (0,001 x average silver price) – whereby the maximum tax rate shall be PLN 2,100 per kilogram.

5. If the average silver price does exceed not PLN 1,200 per kilogram, the tax rate shall be determined based on the following formula: tax rate = (average silver price – 1000 zł) x 0,75 – whereby the minimum tax rate shall be 0.5% of the average silver price’

While the previous total effective taxation of copper exploitation had been about 20 percent of profits including 19 percent paid through the corporate income tax (‘CIT’),126 compared with 57 per cent in Chile, 55 per cent in Botswana or 45 per cent in Indonesia,127 the new rate was set up at from 0.5 percent to even 35 percent of current market prices, due upon exploitation on a monthly basis, plus 19 per cent of CIT, whereby the new tax is not CIT-deductible.128 The structure of fiscal burdens that does not take the cost of exploitation into consideration (mere reference to market prices) probably makes it the highest copper exploitation tax in the world. Mr. Herbert Wirth, the president of the KGHM complained to press in October 2013 that the new tax then meant PLN 6.5 million of new burdens a day. On the annual basis, the KGHM paid in this tax (i) PLN 1.596 billion for three quarters of 2012 (PLN 1,201 billion for copper and PLN 395 million for silver), and (ii) PLN 1,856 billion for

                                                            

126

See: Justification to the Statute on the Taxation of Exploitation of some Natural Deposits (see: note 125), See: Parliamentary Files of the sixth term (Druki Sejmowe VI kadencji) no 144, page 7 available at http://www.sejm.gov.pl/sejm7.nsf/druk.xsp?nr=144 127

See: The taxation of petroleum and minerals: principles, problems and practice, (red.) P. Daniel, M. Keen, Ch. McPherson, Nowy Jork 2010, p 272

128

See: note 125 article 19

24   

  the entire 2013 (PLN 1,444 billion for copper and PLN 412 million for silver).129 Significant declines in copper prices in 2013 intensified calls for the reduction of this tax but the government remained averse to any tax cuts at the turn of 2013/2014 and nothing has been done in this regard since then. Figure 15. Exploitation fee per tonne of copper ore in selected years 2002-2015.130

5 4 3

MINIMUM

2

ACTUAL

1

MAXIMUM

0

MAXIMUM 2002 2005

2010 2011

2012 2013 2014 2015

MINIMUM

    4.3. Sui generis instruction on mining ususfruct price of 2013 In the media hype about the future taxation of shale gas and oil, it escaped everybody’s notice that the Ministry of Environment (Ministerstwo Środowiska) eventually issued, in February 2013, a sui generis interpretative document on the rules of the determination of the remuneration to be paid for the mining usufruct (Zasady ustalania wynagordzenie z tytułu użytkowania górniczego).131 It did so without any legal basis, which is a huge novelty in Polish legal order. The document, de facto, established a parallel taxation system for new mining operations but it does not affect previously concluded agreements on the establishment of mining usufruct. By way of explanation - as mentioned in section 3.3 in fine - the mining usufruct institution introduced under the 1994 Mining Law was unaccompanied with any statutory rules as to its valuation, and this                                                              129

See: KGHM’s corporate site available at: http://www.kghm.pl/_files/Report/raport_g_2013.pdf accessed 6 February 2015 130

See: SCHEDULE B

131

See: note 114

25   

  did not change under the 2011 Mining Law.132 The 2011 mining law only stipulated that mining usufruct right might be preceded with an open tender, 133 shall be up to fifty years, 134 and the remuneration as well as the mode of payment shall be determined in the agreement between the treasury and the usufructuary (being the concessionaire at the same time).135 Meanwhile, setting up any alternative and clear rules was of utmost importance particularly for North American explorers which – on condition that exploration works were successful – would later have a priority right to exploitation concessions and to exploitation-related mining-usufruct-right. In their case, open tenders could not be applied.136 Despite the lack of clear regulation – given that the periodical exploitation-related concession fees had always been a separate issue from a mining usufruct – it would be reasonable to believe that remuneration for mining usufruct should, in principle, be determined one-off, whether in open tendering or not (and whether to be paid one-off or in instalments). Instead, the document created a                                                             

132

‘Each licence must be accompanied by the so-called ‘mining usufruct’. The institution of the mining usufruct agreements between a mining company and the Treasury may be seen as unique to Poland but it is strictly linked to licences. Licences are issued by the Ministry of Environment in the form of administrative decisions while rights of the mining usufruct are established on the contractual basis between the mining company (licensee) and the Treasury represented by the Ministry of Environment acting in its capacity as the owner of hydrocarbon deposits. The mining usufruct agreement, among others, determines the compensation for mining activities that will be paid to the Treasury. Under the Old Mining Law the execution of such agreements could have preceded or could have followed the issuance of licences but, in any case, such agreements became enforceable not earlier than upon the issuance of licence. Although it is not clearly stated under the New Mining Law, such agreements now seem to be only executable after the issuance of licences.’ See: Jędrzej Górski, Sławomir Raszewski, Energy Security or Energy Governance? Legal and Political Aspects of Sustainable Exploration of Shale Gas in Poland, (2014) 12 OGEL 3 at 29 (footnotes omitted) 133

See: 2011 Mining Law article 14

134

See: 2011 Mining Law article 13 section 2

135

See: 2011 Mining Law article 13 section 3

136

‘The selection of a mining company that would get the exploitation licence and would conclude a mining usufruct agreement linked to the licence might but does not need to be done in tendering procedure.136 Usually it cannot because who ‘has explored and documented mineral deposits belonging to the Treasury and has prepared geological documentation to the level of accuracy required for the grant of a concession [licence] for extraction may apply for the grant of mining usufruct rights and shall have in that regard priority over other entities.’ The New Mining Law extended this right from two to five years after receipt of written notice by which the competent authority in geological matters accepted the documentation. Moreover, under both the New and the Old Mining Law, ‘The entity who has borne the cost of geological work carried out on the basis of decisions made under this Law shall have the exclusive right to use, free of charge, the geological information obtained from that work for exploration and scientific purposes and to carry out activities regulated hereunder. This right shall expire five years after the date on which the decision authorising the work from which the information was derived or authorising another activity regulated hereunder or under other provisions ceases to have effect. Unless otherwise provided for in the concession [licence] or decision approving a programme of geological works, the entity having the right to use the geological information thus acquired may make it available to other parties. Because, the proof of title to use the geological information must be attached to the application for the issuance of the exploitation licence, the concurrent applicant, if any, would have to present what it does not/cannot have unless it buys the right to use the documentation from the successful explorer’ See: Jędrzej Górski, Sławomir Raszewski, Energy Security or Energy Governance? Legal and Political Aspects of Sustainable Exploration of Shale Gas in Poland, (2014) 12 OGEL 3 at 29,30 (footnotes omitted)

26   

  parallel system of periodical exploitation fees. It encumbered exploitation operations with annual (i) fixed fees being a kind periodic property tax, and (ii) changeable exploitation-related fees clearly colliding with exploitation-related concession fees.137 It’s relevant provisions read as follows: ‘2. FIXED PART OF REMUNERATION a..

The amount of the fixed part of remuneration shall be equal to between 0.05‰.(per mille) – 1.0‰.(per mille) of the calculated use value of the deposits, (…), except that: (…) (iii)

for deposits of hydrocarbons (oil, its natural derivatives, and natural gas) this rate shall be 0.1‰ of the use value of the deposits,

(…) b.

The use value of deposits shall be determined pursuant to the formula: W+ Q*c*n W – use value of deposits Q – quantity of exploitable deposits (…) c – unit price of the mineral (specified in annex 1) 138

n – the utilisation rate of exploitable or industrial resources or (…)’

‘3. CHANGEABLE PART OF REMUNERATION a..

The amount of the changeable part of remuneration shall be equal to between 5%.(per cent) – 50%.(per cent ) of the exploitation fee due for the exploitation in previous year, except that (…) (iii)

for deposits of hydrocarbons (oil, its natural derivatives, and natural gas) this rate shall be 50% of the exploitation fee, and shall be 5% of the exploitation fee in the Polish sea 139 territory, (…)

In the case of exploration, the document is even more complicated. The remuneration for the usufruct right to exploration works is comprised of the base rate (stawka podstawowa) and of the escalation rate (stawka eskalacyjna). The base rate was drawn upon one-off exploration-concession-fee (PLN 111.72 per square kilometre for 2014 after indexation as mentioned in section 3.5) and is to be paid annually according to the formula: ‘Base rate of the remuneration for prospection or exploration for each year of the base period SP = O * P Whereby: SP – base rate of the remuneration O – area [square kilometres] 140

S – rate [PLN]’

whereby the annual base rate cannot be less than (i) PLN 10,000 in the case of one concession/one mining usufruct covering prospection works (rozpoznawianie – pre-exploration early stage works),                                                              137

See: note 114 point II.1 at 3

138

See: note 114 point II.2 at 3

139

See: note 114 point II.3 at 3

140

 See: note 114 point III.2 Table 1 at 7 

27   

  and (ii) PLN 20,000 in the case of exploration (poszukiwanie), and (iii) PLN 30,000 in the case of both prospection and exploration.141 The base-rate-period in the formula shall be up to three years in the case of concessions limited either to prospection or exploration and up to five years in the case of concessions covering both prospection and exploration.142 After the expiry of the base period, the remuneration shall be calculated based on escalation rate, that is increased in the following years by 20 per cent, and later by 40 per cent (see Figure 16.). Figure 16. Annual escalation remuneration for exploration mining usufruct.143 three-years base period (either five-years base period (both prospection or exploration) prospection or exploration) 120% * base rate

4th and 5th year

6th year and following

140% * base rate

6th, 7th and 8th year

9th year and following

4.4. Surging fixed rates 2015-2020 Similarly to the unnoticed document on the rules on the determination of the remuneration for the establishment of the mining usufruct of February 2013, the government managed to camouflage in early 2014 a significant increase of concession fees, effective from January 2015. The government just sent a message to the public that a new copper/silver-like tax on shale gas and oil will be suspended until 2020 (further discussed in section 4.5). In fact, in early 2014, politicians, the Ministry of Finance and the Ministry of Environment must have cooled down and must have realised that the shale ‘Eldorado’ would not happen in Poland, and that the copper/silver-like taxes would not flow into the budget from shale industry because of significant adjustments to the estimates of shale gas deposits.144 As for December 2013, no exploitation licences for unconventional hydrocarbons had                                                             

141

See: note 114 point III.2.b at 7

142

See: note 114 point III.2.b at 7

143

See: SCHEDULE B

144

 ‘Why is there such a chasm between the two American studies? Why did the US and the Polish authorities who were allegedly working together and using common methodology end up with results varying by three times? Why did different US agencies who were subjected to different departments work on the same issue, one of which out-sourced the whole job while the other made it in-house? And why did the sub-contractor of the US Department of Energy err by so much? An embarrassing explanation was delivered by a very respectable politician, Dr Włodzimierz Cimoszewicz (among others the Prime Minister between 1996-1997, and the Minister of Foreign Affairs between 2001-2005,) in the radio interview in October 2012. Namely, Dr Cimoszewicz had allegedly been told by the distinguished Polish geologist, Prof Krzysztof Szamałek that there was almost no shale gas in Poland and that the outsourced study sponsored by the US Department of Energy had been based on some Polish miscalculated studies. Specifically, one crucial number in one of the Polish studies had been allegedly miscalculated by one decimal place and was used as the basis for further American calculations.

28   

  been issued in Poland. The only good news was that San Leon announced favourable results at its well close to Lewino, a village located 30 kilometres south of the Baltic Sea in November 2013 where the

                                                                                                                                                                                           We are not aware of any Professor Szałamek’s publication or official statements confirming these revelations. Admittedly however, Professor Szałamek emphasised in his papers that all prognoses as to the size of Polish deposits were so far purely speculative, and in that sense there was no documented shale gas in Poland. He assessed that if there had been 500 bcm (more or less the averaged number of the range between 346 and 768 bcm proposed by the Polish Geological Institute) of shale gas in recoverable resources, then decades rather than years would be necessary to reshape Polish energy market. It only remains for us to believe that the 500 bcm being circa one tenth of the whooping 5.29 tcm is not the implied confirmation of the story with the misplaced comma. An alternative explanation was offered by the leading Polish energy markets expert, Mr Andrzej Szczęśniak who drew attention of the public toward the Caspian region in late 1990s. He suggested that, what is happening now about the shale gas in Central Europe/Poland, is a direct repeat of the scenario of the Caspian region in that period. The oil rush launched in the Caspian region when the US Department of State published a report addressed to the Congress in the 1997 estimating that the region might hold up to 200 billion barrels of oil reserves compared with 600 billion barrels of well proven reserves of the Persian Gulf. Emotions were being incited by the US politicians and by influential media all over the world frequently quoting those numbers and claiming that the Caspian region could save the US from the absolute dependence on the Middle East oil. It was a pipe dream for many reasons. The Caspian region had then only 30 billion barrels of document oil reserves constituting 3 percent of world’s proven reserves compared with the Middle East holding world’s two thirds. Mostly because the Caspian region is landlocked, oil could have then been produced there about US$13 a barrel (with transportation) compared with the Middle East then producing under US$3 a barrel etc. Altogether, the Caspian oil could have never become a global game changer. The actual political goals of the US administration encouraging American business to intensify their presence in the Caspian region were then quite clear. Enhancing diplomatic relations with newly independent former Soviet republics, sending numerous political advisors and trying to bring Western-like democracy and values to the region were all obviously targeted at weakening Russia’s (and in the future China’s) influences on the region and at further isolating Iran. However, even if the Polish scenario looks pretty much alike, it is far from being clear what goals the US administration could have achieved in Central Europe by making up statistics in 2011. Poland, for two decades has been economically and politically dominated by the European Union (EU) and the US. Western business plays predominant role in the Polish economy, and the Polish government’s policy toward buffer countries between the EU and Russia is to weaken Russia’s position in the region and to tighten relations between the EU and these countries (e.g. Ukraine, Georgia, Moldova). Polish authorities constantly strive to increase the presence of the US military forces and weaponry in the country and used to support missions both in Iraq and Afghanistan by sending large military contingents there etc. That is all to say that a real change to the politics and economics of the region could have only been brought if the gigantic exploitable shale gas reserves had really been in place allowing diminishing the actual region’s dependency on Russian gas exports. Therefore, our view is that the making up of statistics of the US administration did not make much sense. The other way to explain glaringly exaggerated preliminary statistics (and to support Mr. Szczęśniak’s suggestion that those statistics were made up) is to look at the private actors allegedly responsible for the claimed shale bubble in the US instead of accusing the US administration. The US shale gas reserves have also been overestimated by 100-500 percent depending on state. For instance, the independent American financial market expert Deborah Rogers blamed Wall Street for that phenomenon. She explained that, in order to grow extensively, publicly traded gas companies needed to be attractive to financial analysts and investors so that the access to the capital markets was assured. She made a claim that ‘With the help of Wall Street analysts acting as primary proponents for shale gas and oil, the markets were frothed into a frenzy.’ Therefore, suppose that the preliminary statistic on Poland have been deliberately manipulated, this could have been just a part of a larger game that could have been unrelated to the politics of Central Europe. Good news from Europe could matter for the US capital markets.’ See: Jędrzej Górski, Sławomir Raszewski, Energy Security or Energy Governance? Legal and Political Aspects of Sustainable Exploration of Shale Gas in Poland, (2014) 12 OGEL 3 at 7-9 (footnotes and cross-references omitted)

29   

  trial fracking had provided the continuous gas flow.145 However, press later widely reported that even that one well provided a flow which was only 30 per cent of what would be commercially viable. It follows, that the sense of raising concession fees from January 2015 was to get more money from the PGNIN, the LOTOS and the ORLEN because getting money from North American investor in domestic shale industry would not happen anytime soon. Starting from 1 January 2015, the fee for exploration concession for gas and oil jumped from PLN 111.72 per square kilometre in 2014 to PLN 210 plus indexation in the following years.146 More importantly, the fees for exploitation were for the first time diversified for (i) small-scale (defined as below 1 thousand tonnes per year in the case of oil and below 2500 thousand cubic meters in the case of gas), and (ii) large scale exploitation of oil, gas and high-methane gas.147 While the rates for smallscale exploitation remained unchanged compared to previous general rates, the high-scale-exploitation rates sky-rockected (see Figure 17., Figure 18., and Figure 19.).148 The exploitation fee for oil was increased by almost 36 per cent from PLN 36.84 to PLN 50.00 per tonne. In turn, the natural gas and methane-rich natural gas witnessed a shocking – almost four-fold - change from respectively PLN 5.18 and PLN 6.23 to respectively PLN 20 and PLN 24 per thousand cubic meters. 149 This high rise of exploitation fees also implies a jump in the valuation of the remuneration for the newly established (or extended over new deposits) mining usufruct rights (as discussed in section 4.3).

                                                            

145

 See: Jędrzej Górski, Sławomir Raszewski, Energy Security or Energy Governance? Legal and Political Aspects of Sustainable Exploration of Shale Gas in Poland, (2014) 12 at 11  146

See: 2011 Mining Law {as amended with Official Journal (Dziennik Ustaw) [2014] item 1133} article 133.3c

147

See: 2011 Mining Law {as amended with Official Journal (Dziennik Ustaw) [2014] item 1133} article 133 annex point 11.a), point 11.b), point 12.a), point 12.b), point 36.a), point 36.b) 148

See: SCHEDULE C

149

See: SCHEDULE C

30   

  Figure 17. Increase of exploitation fees in case of production exceeding 1000 tonnes of oil per year from 2015.150

70 60 50

MIN

40

small scale

30 20

actual

10

MAX

0

actual 2002 2005

2010 2011

2012 2013 2014 2015

MIN

Figure 18. Increase of exploitation fees in case of production exceeding 2500 cubic meter of natural gas per year from 2015.151

20 15 MIN 10

small scale actual

5

MAX 0

actual 2002 2005

2010 2011 2012 2013 2014 2015

                                                             150

See: SCHEDULE C

151

See: SCHEDULE C

31   

MIN

  Figure 19. Increase of exploitation fees in case of production exceeding 2500 cubic meter of natural methane-rich gas per year from 2015.152

25 20 MIN

15

small scale

10

actual

5

MAX

0

actual 2002 2005

2010 2011 2012 2013 2014 2015

MIN

4.5. Special tax after 2020 In 2014, it was a common belief of the public that the investors in the Polish shale business might have been discouraged from intensifying exploration works not only because of poor viability of wells but also because of high-profile political statements suggesting that the Treasury should ‘skin’ the shale business. Thus, the government was forced to eventually determine how the new model of taxation of the exploitation of oil and gas will look like, but it postponed the reform’s entry into force until 2020.153 The new model will add two more types of taxes but will not replace two existing ones (three if the CIT/PIT is counted). Firstly, a percentage tax charged on the value of produced of gas and oil will be imposed along with the already existing concession-related exploitation fee and quasiexploitation-fee for establishment of the mining usufruct rights.154 Secondly, an additional quasi-CIT special hydrocarbon tax (specjalny podatek węglowodorowy) will be imposed on profits from operations related to the production of gas and oil in addition to the general PIT/CIT.155

                                                             152

See: SCHEDULE C

153

See: Act of 25 July 2014 on the special hydrocarbon tax (Ustawa z dnia 25 lipca 2014 r. o specjalnym podatku węglowodorowym) Official Journal (Dziennik Ustaw) [2014] item 1215.; 154

See: note article 125 article 3.1.3) and article 3.1.4)

155

See: note 153 article 11.3.12) 

32   

  The provisions regulating the percentage tax imposed on the value of produced gas and oil have been added to the same act which previously had been regulating special copper and silver tax only156 but the design of the hydro-carbon specific tax is completely different. This tax will be due upon supplying gas or oil to the pipe157 (paid on a monthly basis158) based on the following formula: ‘6. The tax rate for the exploitation of gas shall be: 1) 1.5% – in the case of the exploitation of gas from the deposit, which average permeability does not exceed 0.1 milidarcy, and which average effective porosity does not exceed 10% (shale, tight) 2) 3% – in the case of the exploitation of gas from a different deposit that one specified in point 1 7. The tax rate for the exploitation of oil shall be: 1) 3% – in the case of the exploitation of oil from the deposit, which average permeability does not exceed 0.1 milidarcy, and which average effective porosity does not exceed 10% (shale, tight) 2) 6% – in the case of the exploitation of oil from a different deposit that one specified in point 1 8. Rates specified in section 6 point 1 and section 7 point 1 shall apply to the exploitation of gas and 159 oil from seabed.’

whereby the monthly value of gas and oil shall be determined based on listing by respectively the Polish Power Exchange (Towarowa Giełda Energii S.A.) 160 and by the OPEC. 161 In, turn the special hydrocarbon tax would be imposed on proceeds from selling produced oil and gas 162 (on an accrual basis 163 ) minus so-called qualified costs, that is minus exhaustively listed expenses related to the production of gas and oil,

164

including expenses for prospection and

exploration and including taxes and quasi-taxes such as (i) paid general PIT/CIT in part related to exploitation operations, 165 (ii) percentage tax imposed on value of produced gas and oil discussed in previous paragraphs, 166 (iii) concession fees, 167 and (iv) the remuneration for the establishment of mining usufruct. 168 The proceeds from sold gas or oil – regardless of the actual transaction price - will

                                                             156

See: also: Statute of 2 March 2012 on the Taxation of exploitation of some natural Deposits (Ustawa z dnia 2 marca 2012 r. o podatku od wydobycia niektórych kopalin), Oficial Journal [2012] item 362 as amended with Official Journal (Dziennik Ustaw) [2014] item 1215  157

See: note article 125 article 5.2a

158

See: note article 125 article 7a.1

159

See: note article 125 article 7a

160

See: note article 125 article 8a.1

161

See: note article 125 article 8a.2

162

See: See: note 153 article 8.1

163

See: See: note 153 article 8.2

164

See: See: note 153 article 11.1

165

See: See: note 153 article 11.3.12)

166

See: See: note 153 article 11.3.13)

167

See: See: note 153 article 11.3.14)

168

See: See: note 153 article 11.3.15)

33   

  be deemed not lower than 90 per cent of the price listed by respectively Polish Power Exchange169 and the OPEC. 170 The rate of the tax will be calculated on the following formula: ‘Article 14. In the case if: 1) the indicator R is less that 1.5 – the rate shall be 0% 2) the indicator R is equal to or more than 1.5 and less than 2 – the shall be calculated based on the formula: (25 x indicator R - 25 )/100 3) indicator R is equal to or more than 2 – the rate shall be 25%’

171

whereby (i) indicator R means the ratio of cumulative proceeds against cumulative qualified expenses,172 (ii) cumulative proceeds mean the sum of proceeds from oil and gas production from the commencement of the operations, 173 and (iii) cumulative qualified expenses mean the sum of qualified expenses uncured in relation with the oil and gas production from the commencement of operations. 174 It follows that rate of the special hydrocarbon tax would vary from 0 per cent to 25 per cent depending on the ratio of hydrocarbon-specific proceeds and qualified expenses, making in total up to 44 percent of cumulative profit tax along with the CIT the rate of which is 19 per cent (the PIT rate for entrepreneurs such as sole proprietors or partners in partnerships is 19 per cent flat too, but such tax payers might elect a standard progressive scale of 0, 18 and 32 per cent). 5. Assessment The reform can be evaluated at several levels. In the first place, it should be assessed against the goals that the government had delineated while preparing the bill on the special hydrocarbon tax. Those were ‘a) equality and universality of taxation, b) fairness of taxation – which in principle means proper determination of tax burdens, c) effectiveness of taxation – ensuring the proper level of tax revenue without a significant increase of the cost of tax collection, d) exclusivity of the act as to the determination of all significant material elements of taxation such as subject, object, rates, tax credits and brakes’. 175 Also, the new system had been meant to be ‘coherent, transparent and possibly simple.’ 176 Pretty obviously, especially after 2020, the new system will be neither exclusive (provided for in the one act) nor simple. Instead of consolidating hydrocarbon-related tax provisions, the act on the special hydrocarbon tax increased the number of acts regulating hydrocarbon-specific taxes or                                                              169

See: See: note 153 article 8.6.1)

170

See: See: note 153 article 8.6.2)

171

See: See: note 153 article 14.1

172

See: See: note 153 article 2.12)

173

See: See: note 153 article 2.5)

174

See: See: note 153 article 2.6)

175

See: note 2 at 8 

176

See: note 2 at 8 

34   

  quasi-taxes by two on top of already existing (i) 2011 Mining Law (regulating concession-related fees) and (ii) the sui generis ministerial guidelines of 2013 (regulating the valuation of the remuneration for the mining usufruct). No only did it add itself (regulating special profit tax), but also it added provisions on the sales-related percentage royalties to the act which had been originally tailored for coper and silver. The overall multi-act-design of the entire system as well as the legislative quality of particular acts is just hair-raising. This is, however, in line with the overall quality of Poland’s tax system which came one hundred thirteenth in the PWC’s ‘Paying Taxes 2014’ ranking. 177 The reform does meet the postulate of equality and universality of taxation. Tax burdens will be imposed on state-owned and private-owned upstream operations equally, in theory allowing treasury to privatize its remaining stake in the ORLEN (27.54 per cent corresponding with 42.76 per cent of total resource rent), the LOTOS (52.19 per cent corresponding with 62.2 per cent of total resource rent) and the PGNiG (72.4 per cent corresponding with 78.2 per cent of total resource rent). Nonetheless, the game (the privatisation), at least in medium-term perspective might not be worth the candle because the so much awaited new upstream operations of North American shale business will not compensate the decrease of the treasury resource rent to about 40 per cent, especially in the case of full privatisation of the LOTOS and the PGNiG. In fact, North American shale companies have been gradually withdrawing from Poland, the withdrawal by Chevron in January 2015 being the nail to the coffin as for now. The delays in shaping the regulatory environment for doing shale business in Poland, fiscal environment included, should not be blamed for withdrawals though.

It’s true that investors could have been discouraged from

intensifying exploration because of high-profile political statements suggesting significantly higher taxation, as well as by years of uncertainty and poor quality of finally passed legislation. However, the friendly fiscal environment is a secondary matter against the commercial viability of the Polish deposits which proved to be insufficient if the North-American-like technology were to be applied to their exploitation. What makes the matters worse, the sharp plummet of oil prices in the fourth quarter of 2014 essentially precluded the possibility that the development of technology tailored for Polish geological conditions will become economically available anytime soon. This leaves us with the question of the reform’s coherence with state’s policies and the reform’s fairness toward private investors in stock of the ORLEN, the LOTOS and the PGNiNG, among which there are foreign, especially institutional, investors.

Apart from surging fixed exploitation fees

(discussed in section 4.4), the results of the reform will actually be suspended until 2020. The example of the KGHM shows, however, that the immediate legislative process and the entry into force                                                             

177

See: PricewaterhouseCoopers, Paying Taxes 2014: The global picture. A comparison of tax systems in 189 economies worldwide available at: http://www.pwc.com/gx/en/paying-taxes/assets/pwc-paying-taxes-2014.pdf accessed 11 February 2015

35   

  of the copper and silver tax did not significantly affect the KGHM’s stock price in the long term (see: Figure 20.). This might suggest that investors in Polish oil and gas upstream companies do not have to be adversely affected with a plummeting stock price once this reform is fully effective. Things do not look so optimistic, as far as the state’s policy is concerned. No one could deny that strong domestic enterprises with a multinational scope of operations, even if private, (i) assure any government’s stronger international position, and (ii) can be used as a tool of international politics. Meanwhile, the concerns of the public about the KGHM’s potential of global expansion (which it had commenced by buying Canadian Quadra FNX Mining in 2011178), expressed after the copper/silver tax became effective, suggest that the future global expansion of oil and gas upstream companies could be similarly constrained. Simply put, as a result of higher taxes, the LOTOS, the ORLEN, and the PGNiG might not have enough money for acquisitions abroad. Finally, without shale revolution happen, Poland will remain a country highly dependent on imports of gas and oil, and the public policy has been for many years to decrease level of that dependence.179 The increased level of fiscal burdens, resulting in decreased domestic production, might impede this goal. Figure 20. KGHM’s stock price 1997-2015180 

 

                                                             178

See: http://www.wsj.com/articles/SB10001424052970204770404577082391400823460

accessed 11 February 2015 179

See: Jędrzej Górski, Sławomir Raszewski, Energy Security or Energy Governance? Legal and Political Aspects of Sustainable Exploration of Shale Gas in Poland, (2014) 12 OGEL 3 at 12, 15 180

See: http://biznes.pl/gielda/profile/akcje/kghm-polska-miedz-sa,101,2,77,profile-wykresy.html accessed 11 February 2015

36   

 

SCHEDULE A.

Reference table for nationalisation decisions issued 1946-1959

‘M.P.’ stands for Monitor Polski, which is Poland’s parallel series of official journal M.P. 1959 no. 34 item 157 ; M.P. 1954 no. 60 item 807 ; M.P. 1954 no. 60 item 806 ; M.P. 1954 no. 30 item 449 ; M.P. 1954 no. 30 item 448 ; M.P. 1954 no. 29 item 440 ; M.P. 1954 no. 29 item 439 ; M.P. 1953 no. 81 item 969 ; M.P. 1953 no. 79 item 948 ; M.P. 1953 no. 73 item 881 ; M.P. 1953 no. 47 item 548 ; M.P. 1953 no. 38 item 477 ; M.P. 1953 no. 9 item 134 ; M.P. 1953 no. 9 item 133 ; M.P. 1953 no. 9 item 132 ; M.P. 1953 no. 9 item 131 ; M.P. 1953 no. 1 item 24 ; M.P. 1952 no. 105 item 1636 ; M.P. 1952 no. 102 item 1580 ; M.P. 1952 no. 79 item 1282 ; M.P. 1952 no. 65 item 1006 ; M.P. 1952 no. 65 item 1005 ; M.P. 1952 no. 49 item 676 ; M.P. 1952 no. 39 item 572 ; M.P. 1952 no. 23 item 303 ; M.P. 1952 no. 23 item 302 ; M.P. 1952 no. 21 item 271 ; M.P. 1952 no. 21 item 270 ; M.P. 1952 no. 20 item 251 ; M.P. 1952 no. 20 item 250 ; M.P. 1952 no. 18 item 234 ; M.P. 1952 no. 12 item 132 ; M.P. 1952 no. 10 item 104 ; M.P. 1952 no. 1 item 29 ; M.P. 1951 no. 105 item 1546 ; M.P. 1951 no. 99 item 1462 ; M.P. 1951 no. 99 item 1461 ; M.P. 1951 no. 95 item 1332 ; M.P. 1951 no. 95 item 1331 ; M.P. 1951 no. 93 item 1294 ; M.P. 1951 no. 92 item 1273 ; M.P. 1951 no. 88 item 1219 ; M.P. 1951 no. 82 item 1145 ; M.P. 1951 no. 69 item 899 ; M.P. 1951 no. 58 item 766 ; M.P. 1951 no. 50 item 674 ; M.P. 1951 no. 49 item 655 ; M.P. 1951 no. 49 item 654 ; M.P. 1951 no. 45 item 592 ; M.P. 1951 no. 44 item 581 ; M.P. 1951 no. 44 item 580 ; M.P. 1951 no. 44 item 579 ; M.P. 1951 no. 43 item 557 ; M.P. 1951 no. 42 item 526 ; M.P. 1951 no. 38 item 464 ; M.P. 1951 no. 34 item 431 ; M.P. 1951 no. 34 item 430 ; M.P. 1951 no. 31 item 396 ; M.P. 1951 no. 26 item 332 ; M.P. 1951 no. 26 item 331 ; M.P. 1951 no. 14 item 204 ; M.P. 1951 no. 14 item 197 ; M.P. 1951 no. 13 item 192 ; M.P. 1951 no. 7 item 111 ; M.P. 1951 no. 7 item 110 ; M.P. 1951 no. 5 item 71 ; M.P. 1951 no. 5 item 70 ; M.P. 1951 no. 4 item 54 ; M.P. 1951 no. 4 item 53 ; M.P. 1950 no. 133 item 1707 ; M.P. 1950 no. 132 item 1653 ; M.P. 1950 no. 132 item 1652 ; M.P. 1950 no. 131 item 1637 ; M.P. 1950 no. 131 item 1636 ; M.P. 1950 no. 129 item 1617 ; M.P. 1950 no. 128 item 1596 ; M.P. 1950 no. 128 item 1595 ; M.P. 1950 no. 128 item 1594 ; M.P. 1950 no. 127 item 1580 ; M.P. 1950 no. 126 item 1565 ; M.P. 1950 no. 125 item 1556 ; M.P. 1950 no. 125 item 1555 ; M.P. 1950 no. 111 item 1394 ; M.P. 1950 no. 110 item 1381 ; M.P. 1950 no. 108 item 1357 ; M.P. 1950 no. 108 item 1356 ; M.P. 1950 no. 103 item 1293 ; M.P. 1950 no. 101 item 1276 ; M.P. 1950 no. 100 item 1266 ; M.P. 1950 no. 100 item 1265 ; M.P. 1950 no. 99 item 1258 ; M.P. 1950 no. 99 item 1255 ; M.P. 1950 no. 99 item 1254 ; M.P. 1950 no. 99 item 1253 ; M.P. 1950 no. 94 item 1195 ; M.P. 1950 no. 92 item 1151 ; M.P. 1950 no. 91 item 1136 ; M.P. 1950 no. 91 item 1135 ; M.P. 1950 no. 89 item 1124 ; M.P. 1950 no. 86 item 1072; M.P. 1950 no. 86 item 1071 ; M.P. 1950 no. 85 item 1041 ; M.P. 1950 no. 77 item 901 ; M.P. 1950 no. 73 item 843 ; M.P. 1950 no. 61 item 718 ; M.P. 1950 no. 59 item 696 ; M.P. 1950 no. 59 item 695 ; M.P. 1950 no. 59 item 692 ; M.P. 1950 no. 56 item 650 ; M.P. 1950 no. 53 item 620 ; M.P. 1950 no. 53 item 618 ; M.P. 1950 no. 50 item 583 ; M.P. 1950 no. 46 item 528 ; M.P. 1950 no. 44 item 511 ; M.P. 1950 no. 44 item 508 ; M.P. 1950 no. 42 item 494 ; M.P. 1950 no. 40 item 467 ; M.P. 1950 no. 40 item 466 ; M.P. 1950 no. 31 item 365 ; M.P. 1950 no. 30 item 360 ; M.P. 1950 no. 30 item 359 ; M.P. 1950 no. 30 item 358 ; M.P. 1950 no. 29 item 344 ; M.P. 1950 no. 29 item 343 ; M.P. 1950 no. 27 item 333 ; M.P. 1950 no. 27 item 332 ; M.P. 1950 no. 26 item 308 ; M.P. 1950 no. 26 item 307 ; M.P. 1950 no. 23 item 242 ; M.P. 1950 no. 23 item 241 ; M.P. 1950 no. 23 item 240 ; M.P. 1950 no. 23 item 239 ; M.P. 1950 no. 23 item 238 ; M.P. 1950 no. 23 item 237 ; M.P. 1950 no. 22 item 232 ; M.P. 1950 no. 22 item 231 ; M.P. 1950 no. 22 item 230 ; M.P. 1950 no. 22 item 229 ; M.P. 1950 no. 22 item 228 ; M.P. 1950 no. 21 item 225 ; M.P. 1950 no. 21 item 224 ; M.P. 1950 no. 21 item 223 ; M.P. 1950 no. 20 item 209 ; M.P. 1950 no. 18 item 196 ; M.P. 1950 no. 18 item 195 ; M.P. 1950 no. 17 item 183 ; M.P. 1950 no. 16 item 170 ; M.P. 1950 no. 15 item 160 ; M.P. 1950 no. 15 item 159 ; M.P. 1950 no. 12 item 130 ; M.P. 1950 no. 12 item 122 ; M.P. 1950 no. 10 item 107 ; M.P. 1950 no. 7 item 75 ; M.P. 1950 no. 5 item 55 ; M.P. 1950 no. 4 item 50 ; M.P. 1950 no. 4 item 49 ; M.P. 1950 no. 4 item 44 ; M.P. 1949 no. 105 item 1223 ; M.P. 1949 no. 105 item 1222 ; M.P. 1949 no. 104 item 1212 ; M.P. 1949 no. 104 item 1211 ; M.P. 1949 no. 103 item 1210; M.P. 1949 no. 102 item 1205 ; M.P. 1949 no. 97 item 1156 ; M.P. 1949 no. 96 item 1150 ; M.P. 1949 no. 96 item 1149 ; M.P. 1949 no. 94 item 1135 ; M.P. 1949 no. 94 item 1134 ; M.P. 1949 no. 94 item 1133 ; M.P. 1949 no. 93 item 1119 ; M.P. 1949 no. 90 item 1093 ; M.P. 1949 no. 87 item 1078 ; M.P. 1949 no. 87 item 1077 ; M.P. 1949 no. 87 item 1075 ; M.P. 1949 no. 85 item 1054 ; M.P. 1949 no. 85 item 1053 ; M.P. 1949 no. 85 item 1052 ; M.P. 1949 no. 84 item 1038 ; M.P. 1949 no. 83 item 1029 ; M.P. 1949 no. 81 item 994 ; M.P. 1949 no. 81 item 993 ; M.P. 1949 no. 78 item 980 ; M.P. 1949 no. 77 item 954 ; M.P. 1949 no. 77 item 953 ; M.P. 1949 no. 77 item 951 ; M.P. 1949 no. 77 item 950 ; M.P. 1949 no. 75 item 946 ; M.P. 1949 no. 75 item 945 ; M.P. 1949 no. 75 item 944 ; M.P. 1949 no. 75 item 943 ; M.P. 1949 no. 75 item 942 ; M.P. 1949 no. 75 item 941 ; M.P. 1949 no. 73 item 926 ; M.P. 1949 no. 72 item 921 ; M.P. 1949 no. 72 item 920 ; M.P. 1949 no. 71 item 918 ; M.P. 1949 no. 65 item 858 ; M.P. 1949 no. 64 item 857 ; M.P. 1949 no. 63 item 846 ; M.P. 1949 no. 63 item 845 ; M.P. 1949 no. 63 item 844 ; M.P. 1949 no. 61 item 827 ; M.P. 1949 no. 59 item 804 ; M.P. 1949 no. 59 item 803 ; M.P. 1949 no. 59 item 802 ; M.P. 1949 no. 57 item 775 ; M.P. 1949 no. 55 item 751 ; M.P. 1949 no. 55 item 750 ; M.P. 1949 no. 55 item 749 ; M.P. 1949 no. 54 item 743 ; M.P. 1949 no. 54 item 742 ; M.P. 1949 no. 54 item 741 ; M.P. 1949 no. 52 item 724 ; M.P. 1949 no. 52 item 723 ; M.P. 1949 no. 48 item 654 ; M.P. 1949 no. 46 item 627 ; M.P. 1949 no. 42 item 578 ; M.P. 1949 no. 41 item 573 ; M.P. 1949 no. 41 item 571 ; M.P. 1949 no. 41 item 570 ; M.P. 1949 no. 37 item 528 ; M.P. 1949 no. 37 item 527 ; M.P. 1949 no. 36 item 513 ; M.P. 1949 no. 35 item 511 ; M.P. 1949 no. 35 item 510 ; M.P. 1949 no. 35 item 509 ; M.P. 1949 no. 35 item 508 ; M.P. 1949 no. 35 item 507 ; M.P. 1949 no. 35 item 506 ; M.P. 1949 no. 35 item 505 ; M.P. 1949 no. 35 item 504 ; M.P. 1949 no. 33 item 493 ; M.P. 1949 no. 24 item 395 ; M.P. 1949 no. 23 item 368 ; M.P. 1949 no. 23 item 367 ; M.P. 1949 no. 23 item 363 ; M.P. 1949 no. 23 item 362 ; M.P. 1949 no. 22 item 357 ; M.P. 1949 no. 22 item 355 ; M.P. 1949 no. 19 item 287 ; M.P. 1949 no. 18 item 271 ; M.P. 1949 no. 17 item 227 ; M.P. 1949 no. 17 item 226 ; M.P. 1949 no. 15 item 214 ; M.P. 1949 no. 15 item 213 ; M.P. 1949 no. 15 item 212 ; M.P. 1949 no. 15 item 211; M.P. 1949 no. 15 item 210 ; M.P. 1949 no. 15 item 209 ; M.P. 1949 no. 15 item 208 ; M.P. 1949 no. 15 item 207 ; M.P. 1949 no. 12 item 140 ; M.P. 1949 no. 12 item 139 ; M.P. 1949 no. 12 item 134 ; M.P. 1949 no. 12 item 133 ; M.P. 1949 no. 11 item 131 ; M.P. 1949 no. 10 item 123 ; M.P. 1949 no. 10 item 122 ; M.P. 1949 no. 9 item 115 ; M.P. 1949 no. 9 item 114 ; M.P. 1949 no. 9 item 113; M.P. 1949 no. 6 item 70 ; M.P. 1949 no. 6 item 69 ; M.P. 1949 no. 6 item 68 ; M.P. 1949 no. 6 item 67 ; M.P. 1949 no. 4 item 44 ; M.P. 1949 no. 2 item 15 ; M.P. 1949 no. 2 item 7 ; M.P. 1949 no. 2 item 6 ; M.P. 1949 no. 1 item 3 ; M.P. 1949 no. 1 item 2 ; M.P. 1948 no. 86 item 983 ; M.P. 1948 no. 86 item 982 ; M.P. 1948 no. 86 item 981 ; M.P. 1948 no. 86 item 980 ; M.P. 1948 no. 86 item 978 ; M.P. 1948 no. 86 item 977 ; M.P. 1948 no. 86 item 976; M.P. 1948 no. 86 item 975 ; M.P. 1948 no. 86 item 974 ; M.P. 1948 no. 82 item 786 ; M.P. 1948 no. 82 item 782 ; M.P. 1948 no. 81 item 767 ; M.P. 1948 no. 81 item 766 ; M.P. 1948 no. 81 item 765 ; M.P. 1948 no. 81 item 762 ; M.P. 1948 no. 80 item 750 ; M.P. 1948 no. 79 item 708 ; M.P. 1948 no. 79 item 707 ; M.P. 1948 no. 78 item 695 ; M.P. 1948 no. 77 item 684 ; M.P. 1948 no. 76 item 678 ; M.P. 1948 no. 74 item 649 ; M.P. 1948 no. 74 item 647 ; M.P. 1948 no. 74 item 646 ; M.P. 1948 no. 72 item 629 ; M.P. 1948 no. 70 item 601 ; M.P. 1948 no. 70 item 600 ; M.P. 1948 no. 70 item 599 ; M.P. 1948 no. 70 item 598 ; M.P. 1948 no. 68 item 528 ; M.P. 1948 no. 68 item 527 ; M.P. 1948 no. 68 item 526 ; M.P. 1948 no. 68 item 525 ; M.P. 1948 no. 68 item 524 ; M.P. 1948 no. 67 item 522 ; M.P. 1948 no. 66 item 488 ; M.P. 1948 no. 65 item 476 ; M.P. 1948 no. 65 item 475 ; M.P. 1948 no. 65 item 474 ; M.P. 1948 no. 65 item 473 ; M.P. 1948 no. 65 item 472 ; M.P. 1948 no. 65 item 471 ; M.P. 1948 no. 65 item 470 ; M.P. 1948 no. 65 item 469; M.P. 1948 no. 65 item 468 ; M.P. 1948 no. 65 item 467 ; M.P. 1948 no. 63 item 426 ; M.P. 1948 no. 63 item 425 ; M.P. 1948 no. 63 item 424 ; M.P. 1948 no. 62 item 410 ; M.P. 1948 no. 62 item 409 ; M.P. 1948 no. 62 item 401 ; M.P. 1948 no. 60 item 366 ; M.P. 1948 no. 60 item 365 ; M.P. 1948 no. 60 item 364 ; M.P. 1948 no. 58 item 362 ; M.P. 1948 no. 58 item 361 ; M.P. 1948 no. 58 item 360 ; M.P. 1948 no. 58 item 359 ; M.P. 1948 no. 58 item 358 ; M.P. 1948 no. 58 item 357 ; M.P. 1948 no. 58 item 356 ; M.P. 1948 no. 58 item 355 ; M.P. 1948 no. 58 item 354 ; M.P. 1948 no. 58 item 353 ; M.P. 1948 no. 58 item 352 ; M.P. 1948 no. 58 item 351 ; M.P. 1948 no. 58 item 350 ; M.P. 1948 no. 56 item 335 ; M.P. 1948 no. 53 item 302 ; M.P. 1948 no. 44 item 228 ; M.P. 1948 no. 44 item 227 ; M.P. 1948 no. 44 item 226 ; M.P. 1948 no. 44 item 225 ; M.P. 1948 no. 44 item 224 ; M.P. 1948 no. 44 item 223 ; M.P. 1948 no. 44 item 222 ; M.P. 1948 no. 44 item 221 ; M.P. 1948 no. 44 item 220 ; M.P. 1948 no. 44 item 219 ; M.P. 1948 no. 41 item 172 ; M.P. 1948 no. 40 item 171 ; M.P. 1948 no. 36 item 150 ; M.P. 1948 no. 30 item 111 ; M.P. 1948 no. 27 item 103 ; M.P. 1948 no. 27 item 102 ; M.P. 1948 no. 27 item 101 ; M.P. 1948 no. 16 item 57 ; M.P. 1948 no. 9 item 47 ; M.P. 1948 no. 5 item 31 ; M.P. 1948 no. 5 item 30 ; M.P. 1948 no. 5 item 29 ; M.P. 1948 no. 5 item 28 ; M.P. 1948 no. 5 item 27 ; M.P. 1948 no. 5 item 26 ; M.P. 1947 no. 151 item 901 ; M.P. 1947 no. 147 item 885 ; M.P. 1947 no. 146 item 884 ; M.P. 1947 no. 145 item 882 ; M.P. 1947 no. 145 item 881 ; M.P. 1947 no. 144 item 878 ; M.P. 1947 no. 141 item 857 ; M.P. 1947 no. 141 item 856 ; M.P. 1947 no. 140 item 855 ; M.P. 1947 no. 129 item 808 ; M.P. 1947 no. 122 item 776 ; M.P. 1947 no. 122 item 775 ; M.P. 1947 no. 117 item 741 ; M.P. 1947 no. 116 item 737 ; M.P. 1947 no. 115 item 736 ; M.P. 1947 no. 115 item 735 ; M.P. 1947 no. 115 item 734; M.P. 1947 no. 96 item 623 ; M.P. 1947 no. 96 item 622 ; M.P. 1947 no. 93 item 619 ; M.P. 1947 no. 93 item 618 ; M.P. 1947 no. 92 item 616 ; M.P. 1947 no. 92 item 615 ; M.P. 1947 no. 92 item 614 ; M.P. 1947 no. 90 item 608 ; M.P. 1947 no. 88 item 605 ; M.P. 1947 no. 84 item 589 ; M.P. 1947 no. 77 item 495 ; M.P. 1947 no. 60 item 452 ; M.P. 1947 no. 55 item 399 ; M.P. 1947 no. 50 item 326 ; M.P. 1947 no. 44 item 319 ; M.P. 1947 no. 44 item 318 ; M.P. 1947 no. 42 item 314 ; M.P. 1947 no. 42 item 313 ; M.P. 1947 no. 41 item 310 ; M.P. 1947 no. 41 item 309 ; M.P. 1947 no. 41 item 308 ; M.P. 1947 no. 40 item 307 ; M.P. 1947 no. 40 item 306 ; M.P. 1947 no. 39 item 302 ; M.P. 1947 no. 39 item 301 ; M.P. 1947 no. 39 item 300 ; M.P. 1947 no. 39 item 299 ; M.P. 1947 no. 35 item 289 ; M.P. 1947 no. 35 item 288 ; M.P. 1947 no. 35 item 287 ; M.P. 1947 no. 31 item 283 ; M.P. 1947 no. 30 item 282 ; M.P. 1947 no. 21 item 46 ; M.P. 1946 no. 148 item 300 ; M.P. 1946 no. 148 item 299 ; M.P. 1946 no. 147 item 296 ; M.P. 1946 no. 147 item 295 ; M.P. 1946 no. 147 item 294 ; M.P. 1946 no. 146 item 293; M.P. 1946 no. 146 item 292 ; M.P. 1946 no. 111 item 206 ; M.P. 1946 no. 110 item 205 ; M.P. 1946 no. 107 item 199 ; M.P. 1946 no. 101 item 186 ; M.P. 1946 no. 98 item 182 ; M.P. 1946 no. 94 item 176 ; M.P. 1946 no. 92 item 172;

37   

  SCHEDULE B. FIGURE 9

Reference table for exploitation fees 2002-2011 an after 2012

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

MIN

11

11.48

11.75

11.99

12.35

12.5

12.78

13.1

13.46

13.6

actual

25

30

30

30

30

32

32.61

32.6

32.61

34.89

MAX

54.9

57.38

58.7

58.99

61.68

62.6

63.8

65.3

67.17

67.85

FIGURE 10

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

MIN

0.92

0.97

1

1.02

1.06

1.08

1.11

1.14

1.18

1.2

actual

3.81

4.19

4.19

4.19

4.19

4.48

4.57

4.57

4.57

4.9

MAX

4.58

4.79

4.91

5.01

5.17

5.25

5.35

5.48

5.64

5.7

FIGURE 11

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

MIN

2.08

2.18

2.24

2.29

2.36

2.4

2.45

2.51

2.59

2.62

actual

4.58

5.04

5.04

5.04

5.04

5.39

5.5

5.5

5.5

5.89

MAX

10.4

10.87

11.13

11.36

11.71

11.9

12.12

12.4

12.76

12.89

  Minimum and Maximum exploitation fees 2002-2011: For 2002: Official Journal (Dziennik Ustaw) [2001] no. 110 item 1190 For 2003 Polish Monitor (Monitor Polski) [2002] no. 41 item. 643\ For 2004 Polish Monitor (Monitor Polski) [2003] no. 45 item. 692 For 2004 Polish Monitor (Monitor Polski) [2004] no. 40 item. 705 For 2005 Polish Monitor (Monitor Polski) [2004] no. 33 item. 462 For 2006 Polish Monitor (Monitor Polski) [2005] no. 353 item.574 For 2007 Polish Monitor (Monitor Polski) [2006] no. 42 item.485 For 2008 Polish Monitor (Monitor Polski) [2006] no. 42 item.486 For 2009 Polish Monitor (Monitor Polski) [2008] no. 50 item.446 For 2010 Polish Monitor (Monitor Polski) [2009] no. 74 item.927 For 2011 Polish Monitor (Monitor Polski) [2010] no. 56 item.766 Actual fees 2002-2011: For 2002, 2003: Official Journal (Dziennik Ustaw) [2001] no. 153 item 1746 For 2004, 2005: Official Journal (Dziennik Ustaw) [2003] no. 185 item 1804 For 2005,2006 Official Journal (Dziennik Ustaw) [2005] no. 106 item 887 For 2007: Official Journal (Dziennik Ustaw) [2006] no. 214 item 1574 For 2008, 2009, 2010: Official Journal (Dziennik Ustaw) [2007] no. 211 item 1541 Actual rates: For 2012: Official Journal (Dziennik Ustaw) [2011] no. 163 item 981 For 2013 Polish Monitor (Monitor Polski) [2012] item 705 For 2014 Polish Monitor (Monitor Polski) [2013] item 721 For 2015 Polish Monitor (Monitor Polski) [2014] item 902 as amended with regard to oil and gas with Official Journal (Dziennik Ustaw) [2014] item 1133

 

 

38   

  SCHEDULE C. FIGURE 17.

Reference table for exploitation fees starting from 2015

2002

2005

2010

2011

2012

2013

2014

2015

MIN

10.98

11.99

13.46

13.6

n.a.

n.a.

n.a.

n.a.

small scale

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

36.84

actual

25

30

32.61

34.89

34.89

35.87

36.84

50

MAX

54.9

58.99

67.17

67.85

n.a.

n.a.

n.a.

n.a.

FIGURE 18.

2002

2005

2010

2011

2012

2013

2014

2015

MIN

0.92

1.02

1.18

1.2

n.a.

n.a.

n.a.

n.a.

small scale

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

5.18

actual

3.81

4.19

4.57

4.9

4.9

5.04

5.18

20

MAX

4.58

5.01

5.64

5.7

n.a.

n.a.

n.a.

n.a.

FIGURE 19.

2002

2005

2010

2011

2012

2013

2014

2015

MIN

2.08

2.29

2.59

2.62

n.a.

n.a.

n.a.

n.a.

small scale

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

6.23

actual

4.58

5.04

5.5

5.89

5.89

6.06

6.23

24

MAX

10.4

11.36

12.76

12.89

n.a.

n.a.

n.a.

n.a.

Official Journal (Dziennik Ustaw) [2014] item 1133 amending the annex to 2011 Mining Law

39