Zakhidenergo and Donbasenergo 2008 Production Plans Announced

According to the National Energy Company of Ukraine, Zakhidenergo (ZAEN: HOLD) is planning to raise its 2008 electricity output by 10.6% yoy to 16.7 TWh. Donbasenergo (DOEN: BUY) intends to increase output by 8.8% yoy to 7.4 TWh. Alexander Paraschiy: We expect the output increase at Zakhidenergo to be smaller than forecasted: the company under-fulfilled its 2007 plan by almost 2% due to temporary problems with export contracts; as the issues have been not solved yet, we believe its 2008 plan has a high chance of not being realized. We expect the output of Donbasenergo will be higher than the National Energy Company forecasts: we believe that the commissioning of a new CFB power unit and the planned decrease in output by the company’s main competitor in the region, Vostokenergo, will allow the company to demonstrate double-digit growth in 2008.