Centrenergo does not like the option of prepayment for coal in the case of an agreement with DTEK

Acting General Director of Centrenergo Oleksandr Korchynskyi stated that the offer received from DTEK Energy is unacceptable for Centrenergo in several principal positions, including on condition of prepayment, the press service reports.

On June 6, at a meeting with DTEK’s representatives at the Ministry of Energy of Ukraine, Acting Minister of Energy Olha Buslavets instructed Centrenergo to consider “the possibility of purchasing thermal coal from domestic producers at competitive prices. In particular, at DTEK Dobropillyavuhillya LLC, which is a part of DTEK holding and whose mines are idle.

The head of Centrenergo cited the parameters of the new agreement that D.Trading offered to the company, namely the price of UAH 1650 per tonne of thermal coal, emphasizing that pricing is formulaic and will depend on the API 2 index taking into account the dollar exchange rate at the time delivery. This condition is the starting point for the beginning of the second stage of negotiations.

According to Oleksandr Korchynskyi, the biggest obstacle to negotiations now is the demand of DTEK representatives regarding a 100% prepayment for coal shipped.

“Negotiations with DTEK are ongoing. We buy coal from state-owned mines on a postpaid basis and are ahead of schedule: UAH 80 mln has already been paid out of UAH 120 mln foreseen in July. I don’t understand why Centrenergo should provide more favorable conditions to a private company. In addition, full prepayment will require Centrenergo to attract additional working capital, which we just do not have. Let me remind you that the non-working Energorynok SE still owes Centrenergo more than UAH 1.4 billion,” he said.

As of the evening of July 8, the parties agreed to hold the next round of negotiations the next day. The plan is to coordinate technical details of the transaction.

Recall, D.Trading CEO Vitalii Butenko said that DTEK Energo was negotiating with Centrenergo about coal supplies at a price that is almost 10% lower than the gas alternative. According to him, the proposal makes it possible to purchase coal 20% lower than what they now pay to state-owned coal enterprises and almost 10% lower than what they pay for gas.

Tags: The Cabinet of Ministers, gas, DTEK, contracts, coal mining, tariffs, legislation, electricity, Top management, coal, energy market, electricity market, SOE Enerhorynok, Centrenergo, debt, coal mining, negotiations, price, agreement, volumes, energy sector, electricity transmission, coal mine, generation, crisis, Buslavets, The Ministry of Energy, economy, market, power grid, electricity consumption, supplier, consumers

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