Ukrenergo could finance creation of strategic coal reserve for winter

MOSCOW. June 24 (Interfax) - Ukrenergo could finance the creation of Ukraine's strategic coal reserve for the 2022-2023 heating season, as the reserve requires additional funding, Yuriy Boyko, Vice Prime Minister and member of Ukrenergo's supervisory board, told reporters.

"Ukrenergo is under consideration today as the option for financing the creation of the strategic reserve. One of the options could be using the funds that the company has received as a fee for access to the cross-section. These funds of UAH 2.7 billion [approximately $92.3 million] are already in a separate account of the company," Boyko said.

Boyko also clarified that according to the law, funds from the sale of cross-sections must go to finance projects for expanding interstate interconnectors; therefore, financing the strategic coal reserve requires legislative amendments, otherwise this would be considered a misuse of funds.

"On the other hand, it is definitely inappropriate to allow for keeping such a large amount of funds frozen during martial law despite the company not having an urgent need to expand interstate interconnectors at such volumes," Boyko said.

Boyko said that coal from state mines would be bought first, then from private mines, and the main recipient will most likely be state-owned Centrenergo.

"This company is specifically in the most difficult situation, because, among other things, it still operates on an extremely expensive mix of coal. The company has been using significant volumes of expensive coal imported for the last autumn-winter period. Meantime, it has been operating at a surplus for the past four months, like everything else; therefore, in a cheap market that does not cover costs with the sale of electricity," Boyko said, adding that the loss of the Uglegorsk thermal power plant and the long-term forced operation of the Zmievskaya TPP on gas must be taken into account.

Boyko noted that the Energy Ministry would determine the procedure for using and paying for coal from the strategic reserve.

Boyko also said that it was absolutely realistic that the government would accumulate up to three million tonnes of coal by the start of the autumn-winter period.