Ukraine thermal plants enjoy record-high prices in September
7 October 2016
The average price of electricity sold by all Ukrainian thermal power plants (TPPs) amounted to UAH 126.4/MWh in September, Concorde Capital has learned from an Oct. 7 report from Energorynok, the operator of the nation’s wholesale electricity market. This price amounts to a 9% m/m increase, 30% yoy improvement and 6% more than the latest peak, registered in April 2016. The average price includes the prices of 12 TPPs operational on the non-occupied territory of Ukraine, including eight TPPs of DTEK Energy (DTEKUA).
Alexander Paraschiy: The increase in the electricity price generated by TPPs is very likely to be a consequence of the application of a new pricing methodology for coal, the key cost component. The average price increase was about 6% qoq in 3Q16, we estimate. Such an increase will be beneficial for DTEK Energy, which – as we expected earlier – should report much stronger profit in 2H16, as compared to the first half of the year.
As the improvements are in line with our expectations, we remain neutral on DTEKUA Eurobonds. Meanwhile, we are looking forward to hearing soon from DTEK something on success of its Eurobond restructuring efforts, or on the prolongation of the negotiations that were initially scheduled to be completed by Oct. 28.
