Zakhidenergo secures compensation of 2/3 of power unit modernization costs

Ukraine’s electricity market regulator approved UAH 620 mln in extra revenue that DTEK-Zakhidenergo (ZAEN UK) will be eligible for, via the company’s tariff markup, to partially compensate for reconstruction costs at its fourth power unit at Ladyzhyn TPP. The project’s total costs are set at UAH 917 mln (USD 113 mln, or USD 380/kW of unit capacity). The compensation, therefore, will cover 68% of the power unit’s upgrade cost.

Alexander Paraschiy: The compensation rate looks really generous, taking into account that earlier this year, Zakhidenergo was granted a tariff markup in February 2012 that covers 53% of reconstruction costs at its other two power units, while state Donbasenergo received just 44% compensation for its Starobesheve-13 project (May 2012).  The news is positive for DTEK, while it’s broadly neutral for its subsidiary Zakhidenergo.