DTEK blames Russian Railways for blocking coal supplies to Ukraine
27 November 2014
Russian Railways (RZD) officials issued verbal directives banning deliveries of Russian coal to Ukraine, the Interfax-Ukrayina news agency reported on Nov. 26, citing the press service of energy holding DTEK (DTEKUA). The holding reported it learned of the ban from its suppliers. Centrenergo (CEEN UK), another coal importer, confirmed in its Nov. 26 press release that coal supplies from Russia have been recently interrupted, with suppliers referring to force majeure.
Both importers are reportedly in negotiations with their counterparties to resume coal deliveries. DTEK and Centrenergo need to find anthracite coal from somewhere to secure the stable operations of five power stations that were designed to burn this type of coal. All Ukrainian mines producing this type of coal are located on the occupied territories of Donbas.
Alexander Paraschiy: The first time that news appeared on interrupted coal supplies from Russia (on Nov. 24), we concluded that it might have been an attempt by the Russian government to force Ukrainian companies to buy coal in occupied Donbas. This latest information on the possible delivery blockade by officials of Russian Railways (whose president has been already sanctioned by the U.S. government after Russia’s annexation of Crimea) supports our theory.
For sure, it would be much easier and cheaper for Ukraine to purchase coal on the occupied territories of Donbas, but there are political risks for such a deal. Namely, terrorists organizations that control these locations will demand to be involved and such deals will feed these organizations rather than starve them, as the Ukrainian government wants to do.
Power plants burning anthracite coal produced 21% of Ukraine’s electricity last year, and the only viable substitution for them this season could be natural gas in power production form, which is a much more expensive option. Another alternative is importing electricity from Russia, yet it has been already rejected by the Ukrainian government.
