Donbasenergo switches off its main power unit in Sloviansk

Обзоры по компаниям и отраслям 23.06.2014 The Sloviansk thermal power plant (TPP), located in among the fiercest conflict zones in the Donbas war, shifted to its smallest power unit on late Friday, June 20, according to information provided by Energorynok, the dispatcher of Ukraine’s energy system. Last week, owner Donbasenergo (DOEN UK) reported it was unable to replenish coal stockpiles at Sloviansk TPP due to a damaged railway connection to the plant. The company stated its intention of switching to a smaller power unit to cut its daily use of coal by 8x. Donbasenergo reported on June 23 that its total power output on Sunday amounted to 23.2 GWh, or 18% below the amount produced on Thursday. Alexander Paraschiy: The shift to a smaller power unit indicates Donbasenergo’s management does not expect any de-escalation of the conflict in the vicinity of Sloviansk in the near term that would enable the restoration of a railway connection to coal sources. We estimate that at current rates of coal use, the Sloviansk TPP can work on its stored coal for about 100 days. The bad news is the company will underperform its production plan for 2014 due to the emergency situation. The good news is that a majority of the company’s profit that should be generated in 2014 does not depend on its power production. The company approved two ambitious CapEx projects in 2013 and it should generate UAH 937 mln in revenue from the additional tariff markup aimed to cover projects-related costs. This amount exceeds the company’s 2013 EBITDA (UAH 908 mln). Though, the risk is that the two projects – aimed at modernizing one power unit and building a new one on the “risky” Sloviansk TPP – will be postponed due to the current risks and the additional payments to cover the projects’ costs will be adjusted downward.