OREANDA-NEWS. In the first quarter of 2013, DTEK’s coal production enterprises produced 10.2 million tons of coal, its thermal power plants generated 13.3 billion kWh of electricity, and its electricity distribution enterprises acquired 16.3 billion kWh of electricity on the wholesale market.
 
“DTEK’s production in the first quarter was stable on a year-on-year basis,” said DTEK Chief Operating Officer Yuriy Ryzhenkov. “Coal production and electricity generation adjusted to the market situation, in particular to consumption volumes. We considerably increased our electricity purchase volumes from the wholesale market (by 74.2%) due to acquisition of two new enterprises: DTEK Dniprooblenergo in April 2012 and DTEK Krymenergo in May 2012. At the same time, some of our electricity distribution companies reduced purchases due to drops in consumption by households and the steel industry. The coal market situation was complicated by a fuel surplus and was further aggravated by the fire at Uhlehirska TPP. According to experts, the gaseous coal surplus could reach 5.5 million tons. DTEK making every effort to keep the country’s energy system running normally. Our company wants to stabilize the situation by increasing coal and electricity exports.”
Coal production and processing

 DTEK increased coal production by 1.4% YoY in the first quarter of 2013. This improvement was due to the consolidation of three mines and one coal processing plant in Russia in July 2012. DTEK’s processing plants also increased production: run-of-mine coal processing rose by 10.1% and concentrate output grew by 7.2%.
 
Factors that influenced the production indicators:
•A coal surplus in the first quarter of 2013 was caused by lower electricity consumption due to warm weather in January and February.
•DTEK Dobropolyeugol, DTEK Rovenkyanthracite and DTEK Sverdlovanthracite reduced coal production.
• Coal production by the Russian enterprises acquired in July 2012 was included in the 1Q 2013 figures.

Investments in production:
DTEK increased investments in new equipment in the first quarter of 2013. The Company allocated more than UAH 400 million for new longwall equipment. Investments to replace outdated roadheading equipment and to upgrade the transportation chain were approximately UAH 130 million. The labor productivity of DTEK’s coal processing companies were among the highest in the sector: DTEK Mine Komsomolets Donbassa – 96.7 ton/person/month, DTEK Pavlogradugol – 89.7 ton/person/month, and DTEK Rovenkyanthracite – 65.4 ton/person/month.
 
The Company continues to implement the following construction projects:
•fresh-air shaft at the Dobropilska mine of DTEK Dobropolyeugol (overall project budget: UAH 75.6 million)
• vertical fresh-air shaft at the Frunze mine of DTEK Rovenkyanthracite (overall project budget: UAH 214.7 million)
• ventilation shaft #3 at the Yuvileina mine of DTEK Pavlogradugol (overall project budget: UAH 235.0 million)
 
The construction of the shafts will ensure proper ventilation at the extraction sections of the mines. This will improve safety, and further increase per face output due to the supply of a sufficient amount of air to the mine.

 The Company launched a project to technically retrofit the second section of the Pavlogradska Central Concentrating Mill in the first quarter of 2013. The project will increase the mill’s run-of-mine coal processing capacity by one million tons per year, improve the quality of coal products, and save on logistics.

 The Company also purchased new advanced chemical analysis devices that are able to determine the sulphur content of coal in just a few minutes. The ESHKA method previously used took no less than eight hours.

 Power Generation

 DTEK’s performance was also affected by the weather; electricity generation decreased by 10.9%.

 Factors that influenced the production indicators:
• Electricity consumption in Ukraine fell by 6% due to an increased in the average air temperature by 4°С YoY in the first quarter of 2013 .
•The steel industry reduced consumption.
• The Botievo Wind Farm supplied electricity to the energy market since January 1, 2013.

 Investments in production:
The Company completed the modernization and retrofitting of power unit #6 at DTEK Kurakhovska TPP in the first quarter of 2013. The project was completed in record time: 11 months. Total investments in the project amounted to UAH 583 million.

 The power units’s main equipment (turbine, boiler unit, generator, transformer, and electric equipment) was retrofitted using the new technical solutions. For example, for the first time, the electric motor of the feed pump was equipped with a hydraulic coupling to improve its performance. Specific electricity consumption for pumping one ton of water decreased 2.3 times at start-up and by 21% in operational mode.

 The modernization will increase the unit’s installed capacity by 15 MW to 225 MW. The flexible operating range will expand from 80 MW to 120 MW, the productivity range will increase by 3.5%, and specific fuel consumption for electricity production will fall by 7.6%.

 As part of the modernization of power unit #6 of the Kurakhovska TPP, the company reconstructed an electricity precipitator, reducing the emission of solid particles to 0.05 g/nm3 in compliance with European environmental standards. DTEK has included the reconstruction of electric precipitators as part of power unit modernization projects since 2012 in order to achieve compliance with Directive 2001/80/ЕС with regard to dust emissions.

 The Company continued works on the technical re-equipment at other power units: unit #13 of Luhanska TPP, unit #5 of Burshtyn TPP and unit #8 of Dobrotvirska TPP. The reconstruction work will extend the units’ service life by another 15 to 20 years, improve efficiency and reliability, and bring environmental indicators in compliance with international standards. The company will spend a total of UAH 1,417 million, including UAH 135.8 million to rebuild precipitators.

 Electricity distribution

 DTEK's electricity distribution companies purchased 16.3 billion kWh from the Wholesale Electricity Market in the first quarter of 2013, which is 74.2% higher YoY.

 Factors that influenced production indicators:
• The addition of DTEK Dniprooblenergo and DTEK Krymenergo, which were acquired in April and May 2012, respectively.
•Service-Invest decreased electricity sales by 10% due to reduced consumption by the steel industry, which accounted for over 80% of its distribution.
• DTEK Donetskoblenergo and DTEK Dniproenergo’s household clients reduced electricity consumption because of warm weather in February. Households consume 40% of the total electricity distributed by these companies.
 
Investments in production:

 DTEK’s electricity distribution companies continued to implement investment projects to upgrade and construct new substations and electricity transmission lines in the first quarter of 2013. The goal of these projects is to improve the reliability of electricity distribution to industrial consumers and households, as well as to adjacent licensees.

 DTEK Krymenergo continued the construction of the Kubanska 110/10 kV substation in Simferopol. The construction of this new substation will help reduce the load on the existing Skhidna substation 110/35/10 kV, which runs at high load, by 7 MW. The project will ensure reliable electricity supplies to the Khoshkeldy district of Simferopol and the connection of new users.

 DTEK Dniprooblenergo continued the construction of the modern Rodniki 35/10 kV substation in Novomoskovsk (Dnipropetrovsk Region). The commissioning of the new facility, with the transfer of power lines from consumer substation 10 kV (L-28, L-84, and L-104), will help improve the reliability and quality of electricity supplies to 4,400 households and more than 200 corporate users in the Kulebovka residential area and the northern part of Novomoskovsk. Furthermore, it will be possible to create reserve capacity for the industrial and residential development of the town.

 Kyivenergo channeled over UAH 12.9 million into equipment upgrades and the construction of new distribution networks and substations in the first quarter of 2013, as well as UAH 6 million into heating supply and other projects.

 Exports and imports

 Electricity exports grew by 448.9 mln kWh YoY in the first quarter of 2013.

 Factors that influenced production indicators:
 
•         Electricity supply increased to Slovakia, Hungary, Romania, Belarus, and Moldova for the entire reporting period.
•         Supplies to Poland started (in the first quarter of 2012, commercial supplies of electricity to Poland took place only in March).
 
The increase in coal exports in the first quarter of 2013 by 23.5% was because of milder weather than in the first quarter of 2012, which made shipments from ports possible.

 The lack of any coal imports was due to sufficient internal resources for to meet the company’s needs for electricity generation.