Cabinet considers merger of Centrenergo with DTEK-managed state mine

Ukraine’s PM Denys Shmyhal ordered on Sept. 2 to
create a commission that will study the feasibility of uniting state-controlled
power generation company Centrenergo (CEEN UK) with state-controlled coal
mines, including the mines that are leased to private companies, according to a
Interfax-Ukraine report. The commission has to complete its study in one month.
Among the possible candidates for a merger with Centrenergo is
Dobropilliavuhillia, a mining asset that is currently leased by DTEK Energy,
Interfax-Ukraine reported. A day before, DTEK-Dobropilliavuhillia expressed its
readiness to deepen cooperation with Centrenergo, stating that it can supply up
to 4 mmt of coal to the company.

Alexander Paraschiy: With a decline of coal burning by thermal power plants in 2020, DTEK
Energy’s (DTEKUA) mines other than Dobropillia were able to fully satisfy DTEK
Energy’s internal coal needs in 8M20, we calculate. The only market for coal
from Dobropillia is Ukraine where demand outside of DTEK is effectively limited
to the power plants of Centrenergo and some small coal consumers. At the same
time, Centrenergo has enough sources of coal supply even without Dobropillia.
Due to Centrenergo’s refusal to buy coal from Dobropillia in early 2020, the mine was idle between April and
mid-July. All the above suggests
that it could be beneficial for DTEK to pass operating control over Dobropillia
to Centrenergo or any other operator.