GenCos Electricity Production Up 13.6% In 2006

The privately held Vostokenergo was the growth leader in 2006 – mainly due to low output in 2005, as the company’s work was artificially limited for four months in 2005. Vostokenergo found favor on the wholesale energy market due to cheaper coal supplied from related coal mines; the company’s capacities are the most utilized. Centerenergo’s (CEEN: HOLD) and Dniproenergo’s (DNEN: HOLD) considerable progress in power production is also due to their relatively poor performances in the preceding years. CEEN also got a boost from the increase of Ukrainian exports to Belarus and from the reduction of power output by Kievenergo (KIEN: BUY). Note that none of the TPPs used their gas-fueled power units due to high gas prices. Gas prices also caused a decrease of output by the largest combined-heat and power producers, KIEN and Kharkiv CHPP#5.

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                Power output, TWh        yoy growth     Capacity load
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CEEN                          14.11               16%               36%
DNEN                         14.89               13%               30%
DOEN                          7.4                   1%               32%
ZAEN                          15.53                5%               39%
Vostokenergo               17.95               29%               51%
Total GenCos                69.89               14%               37%
KIEN                             5.68              -29%               55%
Kharkiv CHPP#5             2.54               -2%               62%
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Alexander Paraschiy: We see all GenCos further increasing their production in 2007, but the fastest growing companies will be CEEN (due to further growth of exports to Belarus and Russia) and DOEN (due to the expected commissioning of a brand-new power unit in late 2007).