Ukraine prepares for possible blackouts due to coal shipment blockade

Ukrainian ministers initiated a meeting of the “anti-crisis energy staff” to prepare for possible electricity shortages due to the blocking of coal deliveries from occupied Donbas to Ukrainian thermal power plants, the government’s website reported. First deputy PM Hennadiy Zubko ordered the energy ministry to prepare a draft Cabinet resolution on a state of emergency in  the energy sector. Seven regions across Ukraine will have to be prepared for possible electricity supply cuts, according to Zubko.   

Stockpiles of anthracite coal (mined in Ukraine only on the occupied part of Donbas) at six Ukrainian thermal power plants totaled 842 kt as of February 12, according to Ukrenergo, the state power system dispatcher. This would be enough for 40 days of operation in ‘extraordinary’ mode without new deliveries of coal, according to Ukrenergo director Vsevolod Kovalchuk. In normal mode, use of anthracite coal by thermal power plants is close to 30 kt/day these days, meaning that the stockpiles may be exhausted in about four weeks.

The blockade of some railway connections with occupied territories of Donbas was initiated in late January by activists, including veterans from the fighting in Donbas and some members of parliament. So far, the government has found no argument to stop it. Out of 12 thermal power plants in Ukraine, six are dependent on anthracite coal, and there are no alternatives to it in Ukraine. These power plants produced 12% of total Ukrainian electricity in 2016. Six other thermal power plants, which produced 20% of all electricity in Ukraine last year, are burning hard steam coal that is mined in government-controlled Ukraine.

Alexander Paraschiy: It’s too early to claim that the blockade of these railway connections with occupied Donbas threatens the stability of electricity production in Ukraine. For the week of Feb. 5 – Feb. 12, anthracite stockpiles at the six power plants decreased by just 2%, while they should have decreased by 25% if there were no supply of coal. The change of stockpiles of hard steam coal at the other six power plants looks more worrying – they fell 8% in the week, and are only enough to operate for 15 days in normal mode. In other words, currently we are not observing critical levels of stockpiles of “rare” anthracite, while we do observe critically low stockpiles of “easily available” hard steam coal.

The inability to open the routes by the government, which has limited itself to protesting that the blockade is illegal, suggests that the government is aware of the poor popularity of trading connections with the occupied territories. This could mean the blockade could last for a long time and can intensify with the full disconnection of freight traffic with the occupied regions of Donbas. If that happens, this will be negative for DTEK Energy (DTEKUA) and Metinvest (METINV), whose production chains depend on the occupied territories.