Regulator grants Donbasenergo USD 25 mln to finance CapEx

The National Electricity Regulation Commission approved UAH 201 mln (USD 25 mln) in compensation for Donbasenergo (DOEN UK) to finance the reconstruction of the #13 power unit at Starobesheve TPP. The compensation that will be paid from an additional surcharge to the electricity tariff Donbasenergo charges will be split into UAH 4.2 mln in monthly installments over the next four years, starting from June 2012. The compensation amounts to 43% of total planned reconstruction costs for the unit (USD 57 mln) which was approved by the Cabinet of Ministers last week.

Alexander Paraschiy: The news looks slightly disappointing to us, as we expected more compensation (up to 80% of reconstruction costs, refer to our news of May 21). Otherwise, the event is encouraging for Donbasenergo, which will receive additional income worth USD 3.7 mln this year from the surcharge, and USD 6.3 mln in each of the next three years. We also estimate the reconstructed power unit will allow Donbasenergo to save about USD 8 mln annually (at current coal prices) solely on an improvement in the unit’s fuel efficiency by 4 pp to 32.6%. The reconstruction costs (net of the compensation and net of interest expenses) will thus pay back in less than four years of operations.