Ukraine declares emergency in energy sector amid coal blockade

Ukraine declares emergency in energy sector amid coal blockade
Anthracite coal deliveries have been drastically reduced since the blockage of rail routes from Ukraine's Donbas region since late January.
By bne IntelliNews February 16, 2017

Ukraine’s government has declared a state of emergency in the national energy sector due to shortages of anthracite coking coal caused by a protest blockade of rail links from the war-torn east of the country.

A day after the measures were announced, Ukrainian President Petro Poroshenko on February 16 lashed out at the protest by former pro-Kyiv volunteer fighters who are demanding an end to thriving contraband business in and out of rebel-held territory.

“The utterly irresponsible actions of state-mongers who organised this cynical PR for themselves on blood [of others] directly threaten the energy security of the state,” Poroshenko told a meeting of security chiefs.

As a result, the perpetrators were keeping “Ukrainian metallurgy from Ukrainian coke, Ukrainian families from Ukrainian heating, Ukrainian houses from Ukrainian light, Ukrainians from jobs and Ukraine - from stability,” the president said, according to his media office.

Thermal power plants (TPPs) that are fired by anthracite coal will adopt a special operating regime to save resources, the government said in a statement. At the same time, the load of nuclear power plants and thermal power plants that use a different  type of coal will be increased.

The blockade of railway connections with the eastern Donbas region started in late January and intensified in recent days. A full blockade would mean a cut in the supply of anthracite, which is not mined in the government-controlled part of Ukraine, to some Ukrainian power plants. Of 12 thermal power plants operating outside rebel-held areas, six were designed to burn anthracite and last year produced 12% of all electricity in Ukraine.

Prime Minister Volodymyr Groysman also slammed the blockade as unacceptable, saying, “We need to distinguish between fight against smuggling and the fight against Ukrainian citizens”.

The blockade may lead to “serious economic and social problems for Ukraine”, the government statement said. Not only are coal mines located on the temporarily occupied territories, “but also metallurgical companies that pay lot of taxes to the state budget”. Stoppages at metallurgical plants “will lead to a decrease of proceeds from exports and will threaten the stability of the Ukrainian currency”, it added.

The emergency measures, imposed intially for one month, also drew a call from the European Union for an end to the obstructions.

“This can lead to vast energy crisis in the country, which will affect Ukrainian citizens on both sides of the demarcation line,” an EU spokesman said in remarks reported by Ukrinform news agency.

DTEK, one of Ukraine's largest power generators, said it has been unable to deliver its coal across the demarcation line since February 11, Interfax-Ukraine reported. As a result, the company is unable to deliver anthracite and lean coal (mined only in rebel-held areas) to its two power plants located in central Ukraine. It is also unable to deliver hard steam coal mined outside the conflict zone to Zuyivska Power Plant located in the rebel-controlled part of Donetsk region.

DTEK reported that it has switched the affected power plants to minimal working mode and has warned about possible equipment damage to the plants if they have to be fully shut down.

Meanwhile, Ukraine has halted exports of anthracite coal while emergency measures are imposed on the energy sector. "[Export] is prohibited de facto and there cannot be any export for the period of the measures de jure," Interfax news agency quoted Groysman as saying.

According to the prime minister, the government will increase production of gas in order to diversify coal supplies from rebel-held territories. “To achieve modernisation and abandon [anthracite] coal ... we need three-five years plus annual investments worth not less than UAH15bn (€520mn),” the cabinet's media office quoted the PM as saying.

A few days earlier, Deputy Prime Minister Hennadiy Zubko said the government could impose rolling blackouts in the Kharkiv, Dnipropetrovsk, Kyiv, Chernihiv, Zaporizhia, Sumy and Cherkasy regions due to shortages of anthracite coal.