DTEK Luhanska plant won’t get cheap gas from Naftogaz, Cabinet decides

The Cabinet of Ministers of Ukraine decided on Aug. 15
to cancel its decision from the prior day
to allow Naftogaz (NAFTO) to offer natural gas to DTEK’s Luhanska Thermal Power
Plant at a deep discount to the market, Interfax-Ukraine reported on Aug. 15,
citing a government press release. The talks were initiated by PM Volodymyr
Groysman to avoid losses to Naftogaz, the state natural gas transit and
production monopoly.

The Cabinet did not specify an alternative way to
secure uninterrupted power supply to the Luhansk region, only stating that the
Cabinet will adopt a respective resolution at its meeting next week.

Alexander Paraschiy: It was obvious that the Cabinet’s decision to grant a discount to DTEK
(DTEKUA) at the cost of Naftogaz would be short-lived, but we did not expect
that Groysman would cancel it so quickly. Anyway, we were right that the Aug.
14 decision of the Cabinet won’t have material implications on DTEK and
Naftogaz fundamentals.