OREANDA-NEWS. Coal mining by DTEK’s enterprises was 39.7 million tonnes in 2012, coal processing: 27.7 million tonnes, electricity output by generation companies: 51.4 billion kWh, and electricity distribution: 53.9 billion kWh[1]. DTEK completed a phase of active business expansion, and is now moving onto a new stage of focusing on systematic improvement of its enterprises.

 From December 2011 to July 2012, 15 mines and seven processing plants, four thermal electricity generation plants, three electricity distribution companies and the electricity-heating generation-distribution company, Kyivenergo, joined DTEK. The process of integrating newly-acquired companies and bringing them in line with the unified standards is ongoing. The first priority is higher DTEK standards for safety and business ethics.

 “In the upcoming future, DTEK will be fully focused on production, management and investments efficiency,” said Yuriy Ryzhenkov, DTEK’s COO. “The company will continue implementing a strategic program to modernize its facilities. We believe in the strong potential of our companies and intend to bring them to a new level in terms of industrial technology and occupational safety.”

 “The integration process in a company is always a difficult stage. We are grateful to our employees for their efficient work, willingness to change and for understanding the necessity for the processes. However, to us efficiency in tackling social issues is as important as business efficiency. DTEK will continue focusing on the development of regions where it operates, and on increasing living standards and investments in those regions,” said Maxim Timchenko, DTEK’s CEO.
Coal production and processing

 DTEK increased coal production by 65.4% YoY in 2012. Coal processing and concentrate production both doubled YoY, to 27.7 million tonnes and 18.3 million tonnes, respectively.

 Growth drivers were as follows:
•         Concession arrangements for new coal assets – DTEK Rovenkianthracite and DTEK Sverdlovanthracite – in December 2011
•         Acquisition of new assets in Russia (three mines and a processing plant) in July 2012
•         Steady growth in coal production at DTEK Pavlogradugol and DTEK Mine Komsomolets Donbasa (by 10.3% and 5.9%, respectively). Coal production at DTEK Pavlogradugol reached an all-time high of 17 million tonnes

 Investments in production:

 The largest investment projects in 2012 were:
- Continued construction of an air supply shaft at the Dobropilska mine. As the seams of the mine are gas-abundant, construction of the shaft is intended to help supply enough air to the mine and improve the safety of operations. The total budget of the project is UAH 82 million.
- Resumed construction of two air supply shafts at DTEK Rovenkyanthracite. Implementation of the project is expected to increase the output of the Frunze mine by 3.7 million tonnes in 2017-2021 and maintain the output of the Vakhrusheva mine at the current level. The company plans to invest about UAH 380 million to complete the construction.
- Commencement of a project to increase the throughput capacity of the coal winder at the Geroiv Kosmosu mine. Equipment upgrades is expected to improve reliability and increase capacity to approximately 3 million tonnes per year from 2015. Total investments are estimated to reach UAH 117 million.
- Reconstruction of a water-slurry system at the processing plant of Mine Komsomolets Donbasa. The amount of investment in the project was to UAH 117 million. The project is expected to increase output due to processing of fine coal and reduce the impact on the environment by reducing waste to the refuse dump and preventing sludge from getting into the settling pond.
- Launch of a project to commission a new longwall at the Obukhovskaya Public Mining Corporation (Russia). The company will allocate about UAH 139 million to buy new equipment for the longwall. The project is estimated to increase coal output at the mine to 1,1 million tonnes in 2013.

 Electricity generation

 Electricity production by DTEK’s generation companies increased 55.8% to 51.4 billion kWh during 2012.

 Growth drivers were as follows:
•         New acquisitions: three TPPs of DTEK Zakhidenergo, and two combined heating and power plants of Kyivenergo and Myronivka TPP of DTEK Donetskoblenergo
•         Increased electricity exports, which boosted production mainly at DTEK Dobrotvirska TPP and DTEK Burshtynska TPP

 Investments in operations:
- In 2012, DTEK completed the reconstruction of several power generating units: unit #10 at Luganska TPP, unit #8 at Kurakhovska TPP, unit #4 at Zuivska TPP, unit #9 at Prydniprovska TPP, unit #1 at Zaporizka TPP, unit #3 at Kryvorizka TPP, unit #7 at Burshtynska TPP, and the electric precipitator at unit #11 of Prydniprovska TPP. The total cost of the projects was approximately UAH 2.5 billion.
- In 2012, the company also started the reconstruction of unit #6 at Kurakhovska TPP, unit #13 at Luganska TPP, unit #5 of Burshtynska TPP, and unit #8 at Dobrotvirska TPP.
The reconstructions involved upgrading or replacing almost all the power units’ equipment: boilers, turbines, generators, transformers, and the introduction of digital process control systems. This will prolong the service life of TPPs’ equipment by at least 15 years, increase installed capacity and expand the flexible operating range of the units. Modernization is essential for securing the reliable operation of Ukraine’s entire energy system. Furthermore, the company reduces specific fuel consumption, which has a positive impact on the cost of production per one kilowatt-hour and the environmental performance of our TPPs.
Starting in 2012, the electric precipitators at every power unit are being reconstructed, which will bring dust emissions down to 50 mg/nm3, several times below the initial level. This maximum level of dust emissions is provided by Directive 2001/80/EC. Ukraine undertook the obligation to perform the Directive when joining the European Energy Community.
In 2012, DTEK also received a grant from the U.S. Trade and Development Agency (USTDA) for a feasibility study for the construction of modern power units for Burshtynska TPP. The grant amount is more than 600 thousand dollars. Before receiving a grant, DTEK was authenticated due diligence in the U.S., confirming its business transparency. New facilities will replace four existing units of 200 MW each, built in the 1960s. This project is consistent with Ukraine's commitments to upgrade power industry, as well as bringing it to the environmental standards of the European energy community.
 
As part of its environmental programmes, DTEK built up additional tiers at TPPs’ ash dumps, which increases capacity without opening new sites. This also ensures uninterrupted operations of the TPPs and helps avoid water contamination. This work was carried out at ash dump #3 of Luganska TPP, the ash dump in Kalmytska gully (Zuivska TPP), the ash dump in Sukha gully (Kurakhivska TPP) and the ash dump of Krivorizska TPP.

 DTEK signed a memorandum of understanding with the Polish Union for Coal Combustion Products and EKOTECH IP in September 2012, with the assistance of the Polish-Ukrainian Chamber of Commerce and Industry. Joint work will include the implementation of pilot projects on the use of coal combustion products from Burshtynska TPP to construct roads in Ivano-Frankivsk Region.

 Electricity distribution and transmission

 DTEK’s electricity distribution companies increased purchases from the Wholesale Electricity Market fourfold to 53.9 TWh in 2012.

 Growth drivers were as follows:
•         Acquisition of new electricity distribution companies (Kyivenergo in December 2011, DTEK Donetskoblenergo in January 2012, DTEK Dniprooblenergo in April 2012 and DTEK Krymenergo in May 2012).
•         At the same time, Service-Invest reduced electricity purchases from the WEM by 11.43% YoY due to the termination of electricity purchases for Concern Stirol (it has been receiving electricity at an unregulated tariff since October 2011) and a reduction in electricity consumption by enterprises in the metallurgical industry.

 Investments in production:
- In 2012, worn-out equipment at 11 Service-Invest substations and electricity transmission lines on the Donetsk electricity grid were replaced as a part of the investment programme. Modern circuit-breakers, new relay protection and automation terminals, and powerful transformers were installed at the substations to ensure uninterrupted operations there. Service-Invest also bought Pochtovy GPP-1 and Pochtovy GPP-2110 kV substations. Commissioning of those units is expected to ensure reliable electricity supply to residents of the Kyivskyi district of Donetsk.
- DTEK Donetskoblenergo implemented over 150 investment projects, the most significant were the Reconstruction and Upgrade of Scherbakovska substation and Reconstruction of the Kalinovka-110 kV Substation. The upgrades helped reduce interruptions in electricity supply to households in the central Kalininskyi and Voroshylovskyi districts of Donetsk and extend the service life of the equipment.
- A pilot project that introduced an Automated System for Managing Electricity Supplies was implemented at DTEK Donetskoblenergo. The project’s objective was to reduce electricity losses and improve the quality of electricity supply to the company’s private customers.
- Implementation of the project Construction of the New 110 kV Kubanskaya substation by DTEK Krymenergo will contribute to improving the reliability of electricity supplies in the city of Simferopol and help to satisfy the growing demand for electricity in the city.
- DTEK Dniproenergo implemented several large-scale investment projects in 2012: Reconstruction of the Company’s Segment of the 150 kV L-68/69 Overhead Transmission Line from Nefteprovod substation to Kahovskaya HPP, Retrofit of the Podgorodneye-35 substation, Construction of the Mezherichi 35 kV substation, Dispatch Data Display System at KuVES, and Purchase of the Stroymash 150 substation. The total cost of the projects was about UAH 100 million.
- DTEK Energougol ENE invested UAH 16.5 million to upgrade the equipment supplying electricity to Euro-2012 facilities in 2012.
Kyivenergo implemented several significant projects in heat and electricity generation and distribution in 2012:
- As part of the Kyiv development programme and preparation for the European Football Championship, Kyivenergo completed and commissioned the Moskovskaya and Universitetskaya 110/10 kV substations (with a 110 kV transmission line) and reconstructed the high-voltage 110 kV transit line from CHPP-6 to the Levoberezhnaya substation. These projects were aimed at ensuring reliable electricity supply to Kyiv, in particular to central and left-bank districts, and avoiding power outages due to network congestion.
- The company started the project Reconstruction of the 330 kV Open-Door Switchgear at CHPP-5, which is planned to be finished by 2014. This project is undertaken to stabilize operation of the plant during high summer temperatures and eliminate power shortages in the central districts of Kyiv.
- The company retrofitted 33.9 km of its transmission network and upgraded equipment at heat supply units.

 Export and import operations

 Electricity exports doubled YoY in 2012 to 9.7 billion kWh of electricity.

 Main growth drivers:
•         Continuous electricity supply to Belarus throughout the entire year
•         Increased electricity supplies to EU countries.
Coal exports decreased by 19% to 2.8 million tonnes in 2012, which was caused by a continuing decline in demand from external markets and lower prices for thermal coal than in 2011.
The company did not import coal as its internal resources were sufficient to cover the demand of its generation companies.