Donbasenergo gets USD 89 mln power unit reconstruction plan approved

Ukraine’s Cabinet of Ministers approved on April 17 a reconstruction plan for the 12th power unit at Donbasenergo’s (DOEN UK) Starobesheve Thermal Power Plant. Following the UAH 720 mln reconstruction, the installed capacity of the power unit will increase 5% to 210 MW and it will be upgraded with desulfurization equipment, which will cost UAH 199 mln. The project will last two years, according to the plan.

Alexander Paraschiy: The next logical step is to secure financing for the project. We expect the company will receive debt financing from a state bank, as well as gain state compensation amounting to up to 80% of total reconstruction costs from an additional surcharge to its power tariff.

Thy key question is how much of the reconstruction costs will be compensated. A year ago, the company gained funds from a tariff surcharge to cover just 43% of the costs to reconstruct the 13th power unit at Starobesheve, which was the lowest coverage rate in the industry. Given that Donbasenergo is on the state privatization list for 2013, we expect bigger CapEx support from the state regulator, possibly in the form of total compensation of close to UAH 400 mln.