OREANDA-NEWS. May 30, 2012. DTEK continued to post sustainable growth in key production indicators in the first quarter of 2012. Increases in coal production, electricity transmission and supply came mostly via the acquisition of new assets and the group’s program to retrofit equipment.
 
DTEK produced about 10.2 million tons of coal, increased electricity supply to 14.8 TWh, while electricity purchased from the wholesale electricity market to supply to consumers reached 9.4 TWh. Electricity exports grew by 80% on account of a resumption in commercial supplies to Poland and Moldova and increased supplies to Europe (Slovakia, Hungary and Romania) and Belarus.
 
However, generation companies faced some challenges caused by low collections for electricity from the energy market and consumers.
 
“An unacceptably low level of payments for supplied electricity is an important issue that jeopardizes the fulfillment of Ukrainian energy companies’ retrofitting program,” said Yuriy Ryzhenkov, DTEK's COO, commenting on the company’s first quarter performance. “Nevertheless, I would like to emphasize that DTEK keeps investing in the large-scale retrofitting of coal mining and generation equipment. In 2012, total investments to upgrade equipment and facilities, and improve operating efficiency and occupational safety are planned to reach UAH 9 billion. In the first quarter alone, the company recorded a record output in coal production, and completed major retrofits of two power units.”

Coal Production and Processing
 
In 1Q2012, DTEK’s coal production enterprises, DTEK Pavlogradugol, DTEK Mine Komsomolets Donbasa, DTEK Rovenkyanthracite and DTEK Sverdlovanthracite, produced over 10.2 million tons. Due to Rovenkyanthracite and Sverdlovanthracite integration in December 2011, DTEK increased its coal production by 66%.
 
In March, DTEK Pavlogradugol, DTEK’s largest coal production enterprise, set a record for coal output, bringing its quarterly production to 4.2 million tons. DTEK Dobropolyeugol also achieved impressive results and increased its YoY production 1.5 times to 1.1 million tons. DTEK Mine Komsomolets Donbasa focused on safety measures, maintaining coal production at the same level from the previous year.
 
In 1Q2012, DTEK invested over UAH 100 million on equipment for new longwalls, purchasing and repairing roadheaders. Labor productivity indicators at DTEK coal production enterprises are among the highest in Ukraine. The productivity of DTEK Mine Komsomolets Donbasa, DTEK Pavlogradugol and DTEK Rovenkianthracite is 98.3, 81.5 and 52.2 tons per miner per month, respectively.
 
DTEK processing plants also increased their production indicators last quarter. The company continued to restore subsection 3 of Sverdlovskaya CPP (DTEK Sverdlovanthracite) and subsection 3 of Komendatskaya CPP. By restoring and commissioning these subsections, the company will increase its coal processing capacity, ensure reliable operation of its processing plants and will be able to repair other subsections’ equipment without interruptions in operations.
 
Electricity Generation
 
In 1Q2012, DTEK Skhidenergo completed the retrofit of unit #8 of Kurakhovska TPP, which was the largest project of its kind in the history of independent Ukraine. The cost of the retrofit, which was conducted in record time, amounted to UAH 527 million. The company replaced the turbine with a flowpath unit, significantly upgraded the generator, and replaced the transformer and over 70% of boiler facilities. Installation works at the unit were completed in February; set-up and start-up operations are in progress.
 
The upgrade of Kurakhovska TPP’s unit #8 will bring about significant economic and environmental benefits: the unit’s flexible operating range will increase from 70 MW to 100 MW; specific consumption of standard fuel will go down by 40.6 g/kWh; dust emissions into the atmosphere will drop tenfold from 1.85 g/Nm3 to 0.05 g/Nm3, which meets both Ukrainian and international standards. The unit’s installed capacity will increase by 15 MW to 225 MW, and efficiency factor will improve by 3.5%.
 
The retrofit of unit #7 at Burshtynska TPP of DTEK Zakhidenergo is also one of DTEK’s largest investment projects. The total cost of the retrofit is over UAH 350 million. After the retrofit, there will be an increase in the capacity of the unit from 185 MW to 206 MW; emissions of solid particles will fall down to standard 0.05 g/Nm3; specific consumption of standard fuel will decline; and the flexible operating range will widen.
 
Technical re-equipment is continuing on at unit #10 of Luganska TPP, unit #4 of Zuivska TPP and unit #6 of Kurakhovska TPP of DTEK Skhidenergo; unit #3 of Kryvorizka TPP, unit #9 of Prydniprovska TPP, unit #1 of Zaporizka TPP and electric precipitators at unit #11 of Prydniprovska of DTEK Dniproenergo; and unit #5 of Burshtynska TPP of DTEK Zakhidenergo. The retrofits will prolong the service life of the units by 15 to 20 years; improve efficiency and reliability, and bring environmental parameters in line with international standards.
 
In 1Q2012, the TPPs of DTEK Skhidenergo supplied 4.6 TWh to the wholesale electricity market; DTEK Dniproenergo supplied 4.2 TWh and DTEK Zakhidenergo – 4.1 TWh. The TPPs of DTEK Zakhidenergo significantly increased their electricity supply thanks to electricity exports.
 
At the same time, in January collections for electricity supplied by TPPs amounted to about 80%, which became a critical issue for generation companies, which had to pay for consumed coal on time and overhaul power equipment that broke down during the severe frost.
 
Electricity Transmission and Supply
 
DTEK’s power supply companies (Servis-Invest, DTEK Energougol ENE and Kyivenergo) purchased 9.4 TWh of electricity from the wholesale electricity market in 1Q2012. DTEK’s cumulative indicator is up by more than 2.5 times YoY due to the integration of companies acquired in 2011 and 2012.
 
All DTEK’s power supply companies, except for Servis-Invest, increased electricity purchases because of higher electricity consumption by households and coal & engineering companies, as well as low temperatures in February 2012. Servis-Invest purchased less electricity, as iron and steel companies, which account for more than 80% of the total electricity consumption of the company, reduced consumption.
 
DTEK’s power supply companies continued to implement investment projects including the technical re-equipment and construction of new substations, and upgrade and construction of electricity transmission lines. These projects will enhance the reliability of electricity supplies to industrial and household consumers and adjacent license holders. In particular, DTEK Energougol ENE completed the construction of cable OTL and continues to upgrade substations’ equipment to ensure reliable electricity supplies to Euro-2012 facilities.
 
Kyivenergo’s increased electricity purchases in 1Q2012 by 137 GWh (5.1%) YoY, in line with electricity consumption growth in Kyiv. To satisfy this demand, the company invested in upgrading equipment, constructing new electricity networks and substations and the technical retrofitting of CHPPs. In 1Q2012, the company invested UAH 48.1 million to upgrade and construct its distribution networks and substations and UAH 11.2 million on generation capacity (both amounts net of VAT). In 2012, the total investments in such projects will amount to UAH 835.7 million, that is over UAH 1 billion including heating network reconstruction projects.
 
In 1Q2012, the debt of Ukrainian consumers (in particular, of water-supply and coal production companies) for electricity remained considerably high. For example, the level of payments to Donetskoblenergo by the local water-supply company was below 40%.
 
Exports and Imports
 
In 1Q2012, electricity exports grew by 805.9 GWh due to the resumption of supplies to Poland and Moldova, and higher exports to Belarus and Europe (Slovakia, Hungary and Romania). Exports to Europe grew by 398.0 GWh YoY.
 
The reduction in coal exports in 1Q2012 was attributable to exports declining in half in February 2012 due to severe weather in Ukraine and the icing over of sea ports. Decreased imports resulted from increased supplies of in-house coal to generation assets.