As set out by Resolution of the Cabinet of Ministers of Ukraine No. 1215, the process of returning Dobropillyavugillya mines from DTEK’s lease to state management was completed on January 25.
Relevant certificates were signed by the newly established state enterprise Dobropillyavugillya-mining, the State Property Fund of Ukraine and DTEK Dobropillyavugillya. The process of returning Dobropillyavugillya mines from lease was transparent and passed on in compliance with all applicable regulatory and legislative procedures. DTEK duly performed under all its liabilities before the state, including repayment of the lease arrears that emerged in 2020 due to energy crisis and the forced shut-down of the company.
The arrangement to terminate lease agreement for Dobropillyavugillya mines was made as a result of the Cabinet of Ministers of Ukraine having decided to establish a vertically integrated company with participation of PJSC Centerenergo and a number of state-owned coal mining companies. The main goal was to stabilize the situation with coal sales and provide Dobropillya miners with stable work and to ecure a resource base for state-owned generation.
Dobropillyavugillya’s integral property complex has been leased to DTEK since 2010. During this time, the company has invested more than $400 million into the development of mines and renovation of the state property, which allowed it to promote the enterprise as the nation’s second most productive coal producer.
“In the context of crisis in Ukraine’s energy sector, DTEK’s priority task as a responsible and reliable company was to provide Dobropillya miners with stable work. Integration with the state-owned thermal generation is a guarantee of coal sales, and hence the assurance of work for Dobropillya miners. Owing to our investments, the state has obtained an efficient enterprise that is able to supply to the TPPs more than 2 million tons of coal per year (i.e., commercial quality). At the same time, the average daily production from one coal face at Dobropillyavugillya mines is 75% higher than at state-owned mines, labour productivity is almost 6-fold higher and the production costs are 3-10 times lower. The process of returning the company was transparent and passed on in accordance with currently applicable laws. As promised, we have duly performed under our obligations before the state and have done everything possible to ensure uninterrupted coal production during the transition period,” commented Ildar Saleev, CEO of DTEK Energy.
Management of the integral property complex from DTEK Dobropillyavugillya has been transferred to the newly established state-owned enterprise Dobropillyavugillya-mining.
DTEK has taken all necessary steps to ensure smooth running of the company’s coal production process during the transition period. Coal production and preparation of mine workings did not stop during this time. In addition, DTEK provided an opportunity for the state-owned enterprise to redeem at below-market price the equipment, purchased by DTEK during the lease, which is installed in underground production facilities and used for coal mining purposes. The list of equipment necessary for the further operation of the mines was determined by a special commission, which included representatives of Dobropillyavugillya-mining, the Ministry of Energy and the State Property Fund. The value of this property has been determined by an independent expert appraisal and is a much cheaper alternative as compared to purchase of the new equipment and a disruption of coal production in the event of the dismantling DTEK’s operating equipment and installation of new items.
DTEK Dobropillyavugillya’s staff is fully employed by Dobropillyavugillya-Mining, which allowed the state-owned enterprise to start coal mining on 26 January 2021.
The company also paid in full the debts for the lease of Dobropillyavugillya mines (UAH 230.7 million, including default fees), which were accumulated since spring of 2020, when DTEK was forced to shut down the plant for 3.5 months due to the lack of demand for Ukrainian coal. Until present moment and during nine previous years, DTEK has been paying rent for Dobropillyavugillya mines accurately and in full.