OREANDA-NEWS. September 21, 2010. Donbasenergo (UX: DOEN UK) is drafting plans to build two new 330 MW power units at Slavyanska TPP, daily Ekonomicheskiye Izvestiya reported. According to investment director of Donbasenergo, the project had already been approved by the Ministry of Energy. Planned CapEx is UAH 3,000 mln per unit (USD 380 mln) and construction could start in the next two years.

Concorde Capital: we think construction will not start until Donbasenergo is privatized, given the high CapEx needed and the absence of government money to finance it. Estimated construction costs are USD 1,150 per kW, which is lower than the 1,500-1,700 USD per kW industry benchmark for coal-fired power units. Construction costs are lower since there is available land and a connection to the grid at Slavyanska TPP, and we think costs could be further reduced if a more efficient private owner undertakes construction. Currently Slavyanska TPP operates only one power unit with a 800 MW capacity. Given the early stage of the project, we do not expect news to effect the stock.