Puławy, July 31st 2007

New Environmentally Friendly Investments at ZA Puławy

At its meeting held on July 30th 2007, the Supervisory Board of ZA Puławy approved a number of investment proposals to be brought for consideration by the next Extraordinary General Shareholders Meeting of the Company. The Management Board intends to lodge a motion for convention of the Meeting by the end of this week. The Supervisory Board appointed Mr Lech Kliza, to date Vice-President in charge of finance, to coordinate the Management Board’s work.

Statement of the Supervisory Board of ZA Puławy on the Current Situation at the Company

The Supervisory Board resolved to designate Mr Lech Kliza, to date a member of the Management Board, as the coordinator of the Management Board’s work (following the removal of Mr Krzysztof Lewicki from the position of President of the Management Board on July 27th 2007). The manner and timing of the appointment of a new president will be determined at the next meeting of the Supervisory Board, which is set to take place on September 17th. Concurrently, the Supervisory Board resolved on election of two employee representatives on the Supervisory Board within 30 days of September 1st 2007, in connection with the expiry of the three-year term of office.

An important element of the Company’s development strategy is enhancement of its operating efficiency also in the area of hazardous substance emissions. The Supervisory Board approved the proposed investment project involving the construction of a state-of-the-art unit for reducing emissions of nitrous oxide (classified as a greenhouse gas). The project will be implemented in cooperation with BASF AG as part of the Joint Implementation Project.
The project will enable the Company to substantially cut emissions of nitrous oxide, which in turn might contribute ample funds from the sale of emission allowances. According to the Company’s estimates, additional income streams from this source may reach approximately PLN 40m annually in 2008-2012 (at current prices of the allowances). Simultaneously, the Supervisory Board consented to trading in carbon dioxide emissions, within the limitations of the quotas awarded by the National Administrator of Emissions Trading Scheme.

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The Joint Implementation Mechanism is one of the flexible mechanisms under the Kyoto Protocol, allowing the signatories to jointly invest in projects reducing greenhouse gas emissions in order to prevent further global warming.
BASF AG is offering to provide ZA Puławy with a complementary service connected with the execution of the project, which has been tested on its own nitric acid units.

Applicable regulations:

• The Kyoto Protocol to the United Nations Framework Convention on Climate Change, dated December 11th 1997 (Dz.U. No. 203 of October 17th 2005, item 1684)
• Draft Act  on Instruments Supporting Reduction of Emissions of Greenhouse Gases And Other Substances Into the Air, dated April 12th 2007.