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Minister Says Ukrainian Energy Sector Stable, Uranium to Be Developed

Posted on: Saturday, 24 December 2005, 09:00 CST

The stable operation of the Ukrainian fuel and energy sector is a guarantee of the country's security, Fuel and Energy Minister Ivan Plachkov has said. Speaking in an interview with the official cabinet paper, he said that the sector is working in a stable manner, and the ministry has drafted the country's energy strategy till 2030 which, among other points, envisages development of the uranium sector. The following is the text of the interview conducted by journalist Vitaliy Chepizhko entitled "Ivan Plachkov: 'Stable operation of the fuel and energy sector is a guarantee of national security'" published in the Uryadovyy Kuryer paper on 22 December; subheadings have been inserted editorially:

The energy sector is one of those on which development of national economy is based. The national fuel and energy sector is currently working precisely, providing high-quality services to customers. The energy market has been dynamically developing this year, the principles of companies' operation were revised, the process of expansion of the electricity market was continuing and the state system of managing the sector was being improved. It has become a good tradition to sum up the results of the national energy sector's work on the eve of Power Engineering Workers' Day [professional holiday]. The interview with Fuel and Energy Minister Ivan Plachkov is about developments in the sector this year and the plans outlined by its incumbent leadership for the future.

Stable development

[Chepizhko] Mr Plachkov, what positive changes during the recent year would you like to note? What course is presently carried out by the energy sector in resolving issues of strategic importance?

[Plachkov] First of all, I would like to note that the national fuel and energy sector currently has stability in its work, and it supplies customers with energy sources for transparent prices. If we assess the results of the sector's work during the 11 months, the volume of electric power production equals 167.2bn kWh, which is 2.5 per cent more than last year. As of the end of November 2005, stocks of coal in warehouses of thermal power stations [TPS] equaled 3.2m tonnes. This is the first time during the recent years when this result has been achieved. Another important thing is that the tendency to reduce gas consumption by thermal generation has been outlined: it already equals 900m cu.m. According to the results of the first 11 months of 2005, the level of power generating companies' payments for consumed coal equals 100.5 per cent, and it is also significant. Electric power exports volumes from Ukraine saw growth of 68 per cent.

There were also positive developments in the direction of Ukraine's international cooperation in the energy sector. In particular, Ukraine and the European Union signed a memorandum on cooperation in energy sector early in December in Kiev. In accordance with the signed memorandum, one of the basic priorities of Ukraine's cooperation with the EU is integration of Ukraine's energy system in the European one. As of today, agreements have been signed with international institutions with regard to involvement of investments for development of nuclear power stations, hydro- electric power stations [HEPS] and main electric power networks for the sum of 231m dollars. The issue of involving the World Bank loan for completing construction of the Dnistrovska hydro-accumulating power station [HAPS] in the amount of 500m US dollars is also being elaborated. The board of directors of the European Bank of Reconstruction and Development approved at its recent meeting the decision on allocation of a loan in the amount of 25.755m euros for building the main electricity transmission line with a voltage of 330 kV between the Adzhalyk and Usatove sub-stations.

Implementation of this project will enable us to increase security and quality of power supplies to consumers in Odessa Region and working regime of Moldova's energy system.

The Fuel and Energy Ministry has taken a number of measures for improving the state management system in the sector. In particular, according to the government's decision, national joint-stock companies Ukrainian Energy Company and Naftohaz Ukrayiny have been subordinated to the specialized ministry, and this will enable us to carry out single state policy in fuel and energy sector.

I cannot avoid mentioning that many issues still remain unresolved. The important problems to be resolved are diversifying sources of energy resources supplied to Ukraine, dissatisfactory technical condition of power engineering facilities equipment, high energy consumption in national production and substantial level of power engineering facilities negative impact on the environment.

Another major point is supplying Ukrainian consumers with electric power. In accordance with the amendments to the law of Ukraine "On power engineering" adopted in June 2005, the Fuel and Energy Ministry is carrying out a number of measures; in particular, it is increasing the powers of the inspectorate for supervision over subjects of power engineering.

Long-term strategy

[Chepizhko] The draft of Ukraine's energy strategy till 2030 is being broadly discussed this year. What new priority directions does it envisage?

[Plachkov] Ukraine's energy strategy till 2030 has been drafted for preventing deterioration of the country's energy security, for developing fuel and energy sector of Ukraine and for implementing the directives of the president of Ukraine and the Cabinet of Ministers.

The new draft strategy takes into account present-day realities, forecasts of GDP growth, the fuel and energy balance and energy saving. The document primarily envisages higher reliability and efficiency of energy supplies, maximal involvement of energy saving potentialities, reduction of GDP energy consumption from 0.5 kg to 0.2 kg of conditional fuel by 2030, reduction of imports and diversification of external and internal sources of power supplies, maximal use of domestic power resources: coal, rivers' potential and uranium. Ukraine has great prospect in using methane from mines as an alternative source of fuel. Due to these measures, electric power production from our domestic fuel will see a 38-per-cent growth in 2005 and up to 91 per cent in 2030.

In addition, we envisage optimization of the country's fuel and energy balance by reducing natural gas consumption and increasing the share of renewable energy sources. We can say that creation of strategic oil, natural gas and nuclear fuel reserves in the country is the new direction envisaged by the strategy. This document also envisages economically grounded prices and tariffs for the produce of fuel and energy sector for the first time, with gradually drawing them nearer to the level necessary for stable operation and development of the sector's enterprises. Let me remind you: Ukrainian prices for natural gas and tariffs for electric power are among the lowest in the post-Soviet space and in European countries, and they did not change for the people since 1999. The strategy also envisages a new approach to privatization process in energy sector. In particular, in addition to attracting strategic investor to the sector's enterprises, the document envisages establishment of public companies, following the example of their operation in Europe and the USA.

International cooperation

[Chepizhko] When Ukraine puts into operation two nuclear power units, along with the Tashkytska hydro-accumulating station in the near future and the Dnistrovska hydro-accumulating station in a more distant prospect, it will acquire immense exporting potentiality in power engineering. What technical measures do we take to increase the volumes of electric power exports?

[Plachkov] The Ukrenerho national energy company [NEC] recently established a special department to tackle the issue of gradual preparation of Ukraine's energy sector to European principles of work. It implies strategic direction of work in uniting Ukrainian and European energy systems. The NEC personnel is currently carrying out inventory of power engineering assets, studying the problems of technical nature in order to urgently prepare the catalogue of requirements to be implemented during transition to parallel work of the Ukrainian united energy system [UES] and the European energy system.

At the same time, EU member states develop joint projects related to increasing capacities of the "Burshtyn TPS island". The Fuel and Energy Ministry has developed a catalogue of measures for increasing exporting potentialities of branches of Ukrainian fuel and energy sector for the years 2006-2007. It envisages a 280 mW increase of the "island's" technical capacity during the period from 2006 till 2008 through reconstruction and modernization of the Burshtyn TPS energy units. The plan of forthcoming actions comprises passage of the Kalush TPS from the Ivano-Frankivsk regional state administration to be managed by the Fuel and Energy Ministry. Its reconstruction will enable us to increase reliability of work of the "Burshtyn TPS island". The project of the Tereblya-Ritska HEPS is also being considered for increasing its manoeuvring capacity by 30 mW and improving the "island's" working regime.

Uranium production

[Chepizhko] Ukraine has immense potentiality in uranium production. There is an opinion that the companies involved in extracting this resource will reach the level of the most successful ones on the market in the future. What is your vision of development of this direction in nuclear energy?

[Plachkov] Insufficient funding of the uranium industry in 1995- 2004 has resulted in the crisis situation in this sector and a seven- year delay in putting the Novokostyantynivska mine into operation. The needs of the Ukrainian nuclear power sector are currently satisfied only by 30 per cent with Ukrainian uranium, while the rest is covered with supplies from Russia. This is why stabilization of the operating production potential with gradual increase of its capacities in uranium production is among the major tasks of the nuclear industry. Almost 40m hryvnyas [about 8m US dollars] were allocated this year for development of uranium production and re- equipment of uranium mines. Further increase of uranium extraction volumes is envisaged by way of developing new deposits. We primarily plan to complete construction and putting into operation of the industrial complex of the Novokostyantynivska deposit. The start of extraction is scheduled for 2008, and reaching planned capacity - in 2014 or 2015. The needs of nuclear powers stations in uranium concentrate will be fully satisfied by building two new extracting complexes in the Severynivka deposit.

Source: BBC Monitoring Former Soviet Union

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