In Digest, Ukraine

Reuters, Nov 12, 2014

KIEV– Ukraine will be forced to buy coal from Russia to get through the winter, a serious setback to the country’s efforts to lessen energy dependence on its powerful neighbor, Ukrainian Energy Minister Yuri Prodan said on Wednesday.

Conflict between pro-Russian rebels and Ukrainian forces in Ukraine’s industrial east has disrupted coal supplies to thermal power plants (TPP), which provide around 40 percent of the country’s electricity, and has left reserves critically low ahead of the cold winter months.

“We have no other option but to turn to the Russian producers and try to buy coal there, but we put the country’s energy security under severe threat,” Prodan said at a government meeting.

Earlier this year the government signed a deal to import 1 million tonnes of coal from South Africa and has already received three deliveries. But the supplier this week discontinued shipments amid allegations within Ukrainian media of irregularities within the deal.

Prodan on Wednesday denied the allegations and said the price struck within the deal was at market levels.

But he said other foreign traders were likely to refuse to work with Ukraine, fearing problems with the implementation of future contracts.

“The situation is not simple, and there is a danger that we will not be able to get through the cold period. We are continuing to look for alternative routes for coal supplies, but all the other companies are very wary of us,” Prodan added.

Turning to Russia for coal supplies will be a blow for Kiev, whose relations with the Kremlin are at an all-time low following Russia’s annexation of Ukraine’s Crimea peninsula and its involvement in the eastern conflict in which over 4,000 have been killed.

What is more, the two countries are embroiled in a bitter gas dispute, which has spurred Ukraine’s moves to seek alternatives to Russian energy after Moscow cut off gas supplies to the country in June.

The coal and gas shortages have pushed Ukraine to implement electricity limits for certain industries, ration supplies to Crimea and increase nuclear power flows in a bid to prevent rolling blackouts.

Prodan said Ukrainian TPPs had 1.7 million tonnes of coal as of Nov. 12, around 60 percent lower than in December 2013.

(Reporting By Pavel Polityuk; Editing by Alessandra Prentice and Keiron Henderson)


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