DTEK reports on the stoppage of coal delivery to/from occupied Donbas

DTEK Energy (DTEKUA) has been unable to deliver its coal though the line between occupied Donbas and the government-controlled territory of Ukraine since Feb. 11, Interfax-Ukraine reported on Feb. 15 citing the holding’s press service. This is the result of a more active blockade of railway routes on the line connecting the occupied territory.

Namely, DTEK is unable to deliver anthracite and lean coal (mined only in the occupied districts) to its two power plants located in central Ukraine. It is also unable to deliver hard steam coal (mined outside the occupied territory) to Zuyivska Power Plant located in the occupied part of Donetsk Oblast. DTEK is only able to supply anthracite from the occupied districts of Luhansk Oblast to its Luhanska Power Plant, located within the area of Kyiv’s control.

DTEK reported that it has switched the affected power plants to minimal working mode and has warned about possible equipment damage to the plants if they have to be fully shut down.

The blockade of some railway connections with the occupied Donbas started in late January and seems to have intensified this week, with little information available on its scope. On Tuesday, Alchevsk Steel, located on the occupied territory, announced the stoppage of hot iron production due to the cessation of iron ore deliveries.

Alexander Paraschiy: No doubt, this development is negative for DTEK, as it is unable to deliver about a third of the coal it mines to power plants and that the power plants responsible for about a quarter of the holding’s electricity production are left without stable coal deliveries.

In particular, four out of DTEK’s nine thermal power plants depend on the free movement of coal though the separation line in Donbas. Of those four, three power plants (responsible for about 23% of DTEK’s total electricity production) are already being affected by the blockade, and the fourth one (about 8%) is also under risk. Based on existing information, we estimate that the plants have enough stockpiles to operate on minimal mode for about four weeks. So far, we expect the government will be able to find a solution and unblock coal deliveries in the coming weeks. However, the uncertainty remains.