Dniproenergo and Centrenergo 2008 Production Plans Announced

Following announced production plans for Donbasenergo (DOEN: BUY) and Zakhidenergo (ZAEN: HOLD), the National Energy Company of Ukraine disclosed plans for other generation companies. Centrenergo (CEEN: HOLD) plans to decrease its electricity output by 2.3% yoy to 14.7 TWh this year. Dniproenergo (DNEN: HOLD) is scheduled to reduce its 2008 electricity output by 3.6% yoy to 16.0 TWh. Alexander Paraschiy: The planned decreased output is related to the regulator’s intention not to use the gas-fired power units of Centrenergo and Dniproenergo in 2008. Last year, the share of electricity produced by gas-fired power units was 15% for Centrenergo and 11% for Dniproenergo (this share was zero for both companies in 2006 and 2005). The 2008 production plans imply an increase in the output of coal-fired power units of the two companies: +14.8% yoy for Centrenergo and +8.0% for Dniproenergo. We believe the forecasts are realistic, while there still is a chance for total output growth in 2008 for both companies, if the regulator again allows gas-fired power units to operate.