DTEK Dobropilliacoal mines cannot resume operation due to ongoing crisis in the country's energy sector
The forced shutdown of DTEK Dobropilliacoal mines and Zhovtneva CPP is extended for one more month - until August 1, 2020
The operation of Dobropillia mines was suspended from April 1, 2020 due to a systemic crisis in the energy sector and the lack of demand for Ukrainian coal. Unfortunately, the situation in the energy sector is getting worse. Ukrainian coal (as fuel for thermal power generation) remains poorly demanded to provide all Ukrainian miners with work, and the prices for electricity generated by TPPs remain low.
Despite the government attempts to stabilise the situation in the industry, there are still persistent problems with individual market participants not meeting the forecast and fuel balance.
Since May, a number of state-owned thermal power plants that traditionally operate on coal have been using gas as fuel. This leads to a worsening of the situation: steam coal in Ukrainian mines remains unclaimed and unnecessary. So businesses are at risk of a final halt.
The issue of low prices for electricity generated by thermal power plants also remains unresolved. Due to thoughtless initiatives of the state regulator (NEURC) and speculative traders' manipulations, the prices for electricity produced by TPPs are artificially lowered and kept at an average of 1,250 UAH/MWh. This is far below the breakeven level. And this affects the 'coal component' of the tariff. Because of this, it is impossible to get enough money for steam coal to offset the costs of its production, to pay salaries to miners.
Over the entire June, not a single tonne of coal had been shipped from emergency stocks of DTEK Dobropilliacoal to thermal power plants.
There are almost 150 thousand tonnes of unclaimed coal in warehouses.
Therefore, DTEK Energy is forced to extend the downtime of DTEK Dobropilliacoal and Zhovtneva CPP mines until August 1, 2020.
The Company keeps doing everything possible to preserve and support production activities. The downtime will be resumed for 6.5 thousand employees of mines and coal processing plant, who will continue to receive their salaries in the amount of their base wage rates. The remaining 1.2 thousand employees will be engaged in production maintenance, including ventilation of mine workings, pumping out of water, and control over equipment condition.
The DTEK Energy management is doing everything possible to remedy the situation and steer the enterprises out of crisis. We are looking for options to sell coal, reduce the coal production cost and increase its competitiveness, bringing our position at the meetings of the Energy Crisis Task Force and the Ministry of Energy, addressing the experts and highest bodies of state authority.