OREANDA-NEWS. For the first nine months of 2013, DTEK coal production enterprises produced 30.3 million ton of coal (+3.3 % compared to the period from January to September of 2012 ), thermal power plants supplied 38.1 billion kWh of electrical power (-1.2%), DTEK distribution enterprises purchased 43,9 billion kWh of electricity in the wholesale market of electrical power (+16 %).

Situation for electricity generation by thermal power plants in Ukraine is still difficult. In the period from January to September of 2013, total electricity consumption in Ukraine has decreased by 3.2% to 134.3 billion kWh, which is reflected in the performance indicators of major generating companies of Ukraine.

Due to reduction in electrical power consumption, supply of coal by coal production companies to thermal power stations decreased by 5.3%. Aside from that, the situation is complicated by the declining market for state-owned mines that produce G grade coal due to the interruption in the operation of the Uhlehirska thermal power plant.

"In conditions of coal surplus, DTEK fulfils its commitments to purchase fuel from the state-owned mines to maintain the normal rhythm of the coal mining industry of the country. The company acquired 2.2 million tons of coal from state mines, which certainly puts pressure on our coal mining indicators. DTEK keeps coal production at the level of the previous year due to the acquisition of new assets and increasing coal export. In addition to that, coal export enabled the company to stabilize electricity production: the level of the previous year was practically maintained for the first 9 months of this year. The company is making efforts to ensure positive dynamics of production. But we see that the situation in the domestic and foreign markets remains difficult. Despite this, DTEK is investing in the development of production - it is planning to direct UAH 8 billion into the modernization of its capacities in 2013", DTEK's Chief Executive Officer Yuriy Ryzhenkov said, commenting on the results of the company for the first 9 months of 2013.
Coal mining and processing

For the first 9 months of 2013 the volume of produced and processed coal by DTEK remained almost at the level of the previous year due to positive dynamics of companies, consolidated by DTEK in 2012. From January to September coal production increased by 3.3%, and coal preparation increased by 4% compared to the same period of 2012.

Factors affecting the performance indicators:
Reduction of the total electrical power consumption in Ukraine by 3.2% from January  to September 2013, compared to the same period in 2012;
Continued surplus of grade G coal, caused by reduction of the number of working thermal power plants;
Commitments of the company to purchase coal from state-owned coal mines: for the first 9 months, DTEK purchased 2.2 million tons of coal from state-owned enterprises;
Decline of coal production by the majority of Ukrainian mine administrations of the DTEK for the first 9 months of 2013 due to changes of the demand structure in the coal market and difficult geological conditions;
Inclusion of Russian enterprises (three mines and a preparation plant) and Bilozerska Mine ALC, acquired by DTEK in 2012, into the coal production and processing data.

Investments into production:

DTEK continues to invest in the development of coal production enterprises, using new equipment and modern technology. For the first 9 months of 2013 DTEK has spent UAH 907 million on the longwall equipment of the mines, invested UAH 366 million in renewal of the roadheading equipment and modernization of the transport chain.

Investments enabled improvement of working conditions of miners and at the same time improvement of labor productivity. DTEK coal production companies maintain high levels of productivity: DTEK Mine Komsomolets Donbasa mine - 97.8 t/man/month, Pavlogradskaya mine administration - 98.4 t / man/month.

The company continues implementation of the following projects:
Technical re-equipment of the second section of Pavlogradskaya Coal Preparation Plant (total project budget is UAH 122.2 million, aimed at increasing the processing capacity of run-of-mine (ROM) coal by 1 million tons and the opportunity to produce export quality coal;
Increasing the capacity of the lifting complex at Heroyev Kosmosa mine (total project budget is UAH 117.4 million), which will allow increasing its capacity to 3 mil. tons per year in 2015;
Construction of air supply shafts at V.V Vakhrushev and M.V. Frunze mines (total project budgets are UAH 127.7 million and UAH 214.7 million, respectively); construction of ventilation holes at Yubileyna and Dobropolskaya mines (total project budgets are UAH 235 million and UAH 74.7 million respectively). New ventilation facilities will allow improving safety of miners, supporting coal production at the current level and further increasing it by providing the necessary amount of air to the mines.

Electrical power generation

Decreased electricity generation by the Company in the Q1 2013 by 10.9% continues to have a negative impact on performance indicators in general. According to the results for first 9 months of 2013, DTEK enterprises supplied 1.2% less electrical energy than for the period from January to September 2012, despite the growth of electricity supply in 3Q 2013 by 6.8%.

Factors affecting the performance indicators:
Supply of electricity by hydro power plants and hydroelectric pumped storage power plants of Ukraine increased by 42.7% for the first 9 months of 2013, which resulted in reduction of electricity generation by other producers;
Demand for electrical power by industrial and public utility consumers in Ukraine fell by 6.8 % and 0.6% respectively from the beginning of the year;
Supply to Kyivenergo decreased by 31% in order to reduce consumption of natural gas;
The Botievo Wind Farm started selling electrical power to the energy market on January 1, 2013.

Investment into production:

In Q3 2013, DTEK continued modernization of the following power units: №1 at Krivyi Rih TPP, № 13 at Luhansk TPP, №5 at Burshtynsk TPP and №8 at Dobrotvorska TPP. The Company plans to invest UAH 1.9 billion in modernization of these units.

Technical reequipment of power units can extend their service life by 10-15 years, increasing power, flexibility range and reducing specific fuel consumption. Since 2012, reconstruction of electric precipitators is performed during power unit modernization in order to achieve compliance of dust emission with Directive 2001/80/ЕС.

Mounting of the second stage of wind turbines started at Botievo wind power plant in September. The power plant will have 35 power units V112-3.0 MW with capacity of each unit 3 MW. Construction of the second stage of the power plant is scheduled for completion by the end of 2013.

Electricity distribution

For the first 9 months of 2013, energy distribution enterprises of DTEK increased purchases of electrical power in the Wholesale Electricity Market (WEM) by 16% compared to the same period of 2012. The growth was due to the consolidation of the company's enterprises in 2012 of Dniprooblenergo and Krymenergo. In 3Q DTEK enterprises decreased volume of electrical power purchased in WEM by 4.9%.

Factors affecting the performance indicators:
 
Share of municipal thermal power plants and isolated generation plants in the electricity market of Ukraine increased to 4.1%, which caused reduced supply by other enterprises;
Service-Invest and DTEK Donetskoblenergo reduced purchases of electrical power due to reduced consumption by industrial companies;
Electrical power consumption by household customers of DTEK Donetskoblenergo reduced: population consumes around 40% of all electrical power supplied by this enterprise;
Addition of DTEK Dniprooblenergo and DTEK Krymenergo power supplying companies in April and May 2012.

Investments into production:

In the third quarter, distribution companies finished reconstruction and modernization of substations Severnaya (Krymenergo), Chasiv Yar (Servis-Invest), YuGOK-150 kV and Severnaya 150/35/6 kV (DTEK Dniprooblenergo) .
Kyivenergo began construction of Novokievskaya-Moskovskaya cable lines to provide reliable power supply to the central part of the capital of Ukraine.

Exports and imports

DTEK became an active player in the gas market. In July, DTEK started supplying natural gas from Europe. By the end of the third quarter of 2013, DTEK imported 312.4 million cubic meters of gas. Creating of new branches of business was caused by the need to provide resources to its own generating capacity and supply needs of companies of SCM group, which totals about 6 billion cubic meters of gas per year.

DTEK increased supply of electricity for export from January to September of 2013 by 4.3% compared to the same period of 2012. At the same time, due to the unfavourable situation on foreign markets, electricity export fell by 12.2 % in the third quarter.

Coal exports increased from January to September 2013 by 54.5 % compared to the same period of 2012 due to increased supply to Turkey, Bulgaria, Moldova, Russia, China, Belgium and other countries.