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Donbasenergo to Get USD 14 mln to Help Build New CFB Power Plant

Donbasenergo to Get USD 14 mln to Help Build New CFB Power Plant

11 October 2008

The Cabinet of Ministers yesterday decided to provide additional USD 14.3 mln to Donbasenergo (DOEN: BUY) to cover increased costs related with EBRD loan taken to reconstruct the Starobeshev thermal power plant. According to Minister of Fuel and Energy Yuriy Boyko, the decision on additional financing was made to offset currency losses associated with the rising Euro, the denomination of Donbasenergo’s EBRD loan. The Starobeshev TPP’s power unit #4 was reconstructed in 2002-2007 and is the first in Ukraine with CFB technology for burning coal. It is now expected to be commissioned in March 2008. The cheaper electricity provided by the new unit implies an increase in Donbasenergo’s output and profits next year. Among the generators we believe Donbasenergo has the largest upside (34%) to its current price, and recommend flipping out of Dniproenergo (DNEN: HOLD), which we believe is near its fair price, and into DOEN for those looking to continue their energo run.  

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