Business news from Ukraine

CENTRENERGO SEEKS TO IMPORT 300,000 TONNES OF COAL VIA PORTS BY LATE 2016

3 August , 2016  

KYIV. Aug 3 (Interfax-Ukraine) – Public joint-stock company Centrenergo by the end of this year seeks to import around 300,000 tonnes of coal via ports, acting Director General Oleh Kozemko has said in an interview with Business Censor online publication.

He said that the oral order was made after a meeting of a working group headed by Deputy Prime Minister Volodymyr Kistion on July 25.

“The company was ordered to diversify supplies. I as acting director general support this. The other question is at what price to buy and how it will be compensated for the company in the tariff. For the chief the key efficiency indicators are profit and profit margin,” he said.

Kozemko said that the purchase price of coal in South Africa is even higher than the price of steam coal with delivery from Rotterdam port under the formula provided by the National Commission for Energy, Housing and Utilities Services Regulation (NCER). Today, the indicative Rotterdam price of one tonne of coal with caloric value of 6,000 kilocalories per kilogram is around $51 (for 12 months) plus freight of around $5.

“The cost of coal included in the wholesale market price is $56 or UAH 1,400 per tonne with caloric value of 6,000 kilocalories per kilogram on the CIF conditions (not taking into account handling and railway tariff). The best offer for coal from South Africa received by Centrenergo is $72 per tonne with delivery to port on the same conditions. The best price for imported coal is $16 more than the Rotterdam price,” he said.

He also said that we will sign contracts to supply coal from South Africa only when he received the state appraisal.

“We are waiting for the document from the Institute of Legal Expertise. We have one question to it: would the purchase of imported coal be considered the loss caused to the company,” he said.

“If the company has a mixture of imported and Ukrainian coal, it will be able to see profit. If Centrenergo has to increase imported coal volumes, the company could see loss. If the company fully switches to imported coal, the indicative price set by the NCER for 2016 would not cover expenses,” Kozemko said.

He recalled that early 2016 the company imported coal from South Africa at $56 per tonne, but its caloric value was 5,200 kilocalories per kilogram.