New Incentive Programme

Polski Koncern Naftowy ORLEN S.A. ('PKN ORLEN'), Central Europe's largest downstream oil company, announces that it has initiated a procedure aimed at the issuance of bearer bonds with a pre-emptive conversion right.

The Management Board of PKN ORLEN has submitted to the Agenda of the upcoming General Meeting of Shareholders points related to the implementation of a new incentive programme, based on issuance of convertible pre-emptive subscription bonds (New Incentive Programme - NIP). PKN ORLEN's NIP follows the termination at the end of 2003 of the current Management Option Programme based on the issuance of series A bonds convertible into series D shares.

Convertible pre-emptive subscription bonds of par value and issue price of PLN 0.01 each and issued under NIP (Bonds) are planned to be initially purchased by Powiernik - a trustee, which shall then offer these Bonds to entitled participants of the NIP.

The Management Board recommends that, with respect to the NIP, PKN ORLEN issues: (i) 3,866,667 series B Bonds, (ii) 3,866,667 series C Bonds, (iii) 3,866,666 series D Bonds and (iv) 1,000,000 series E Bonds.

Following the Management Board's proposal, one Bond of B, C, D and E series can be converted into one PKN ORLEN share of E, F, G and H series, respectively.

The deadline for the purchasing term and pre-emptive expiry date shall be on 31st December 2010.

It is not intended that interest should be charged on the Bonds.

The Management Board of PKN ORLEN proposes that, in order to give the Bond owners the right to convert them into PKN ORLEN shares, the General Meeting of Shareholders should conditionally increase PKN ORLEN's initial capital of PLN 15,750,000 through the issuance of not more than (i) 3,866,667 ordinary bearer series E shares, (ii) 3,866,667 ordinary bearer series F shares, (iii) 3,866,666 ordinary bearer series G shares and (iv) 1,000,000 ordinary bearer series H shares.

The value of PKN ORLEN's equity as at 31st March 2003 equals PLN 8,313,571,000. Total par value of Bonds of PLN 126,000 accounts for 0.0015% of PKN ORLEN's equity, whereas total par value of PKN ORLEN's shares, which can be converted from Bonds, equals PLN 15,750,000 and accounts for 0.19% of PKN ORLEN's equity. The sum of total par value of Bonds and total par value of all issued bonds of PKN ORLEN which did not undergo redemption (i.e. par value of series A convertible bonds of PKN ORLEN of PLN 14,180,980 into PKN ORLEN's series D shares) accounts for 0.17% of PKN ORLEN's equity as at 31st March 2003.

The Management Board proposes that the General Meeting of Shareholders, following the Board's motion, authorises the Supervisory Board of PKN ORLEN to make a decision on the potential public trading of Bonds. Provided that the Supervisory Board consider public trading of Bonds relevant, they would be authorised to make such a decision by the time Powiernik is offered the Bonds