Ukraine considers halting Russian coal imports
Friday, Mar 17, 2017
Ukraine, which has suffered from coal shortages this year because of a trade blockade in the Donbass region, risks exacerbating the crisis by halting imports of Russian coal.

Since January, protest groups have been preventing the transport of coal from separatist regions into Ukraine via rail, causing a dramatic rise in Ukraine’s imports of the fuel. During the first two months of the year, the country spent US$358 million on coal imports, around double the figure for January and February 2016. Russian coal accounted for 69% of this sum, up from around 55% a year earlier, while the US accounted for 18%.

Despite the growing need for imports, however, Ukrainian Energy Minister Volodymyr Nasalyk announced on March 3 that he would ask the government to halt deliveries of anthracite from Russia.

The minister said he was opposed to the purchase of Russian coal in principle, as he suspected that authorities in the self-proclaimed republics of Donetsk and Lugansk were planning to send their coal to the bordering province of Rostov in Russia, from where it could be sold to Ukraine at a higher price.

Indeed, the head of the Donetsk People’s Republic (DNR), Alexander Zakharchenko, announced this week that 95 wagon loads of coal had departed from Donetsk railway station for Russia on March 14.

Zakharchenko did not say how much coal the wagons contained, but noted that rerouting cargo flows to Russia would take three months because of issues with documentation.

Halting Russian shipments would undoubtedly worsen Ukraine’s coal shortages. Reuters reported on March 9 that Ukraine’s biggest private energy company, DTEK, had shut down almost all of its coal mines in rebel-held areas as a result of the blockade.

DTEK’s thermal power plants (TPPs) in government-held areas depend heavily on anthracite from the west, and so the company has had to resort to increased supplies from Russia, where coal is relatively cheap. DTEK was Ukraine’s top importer of Russian coal in 2016, even before the blockade.

Representatives of the Ukrainian Energy Ministry said at a meeting on March 10 to discuss diversifying coal imports that new contracts to buy the fuel from other countries could not be signed earlier than May.

Additionally, only two of Ukraine’s ports – Yuzhny and Chernomorsk – are capable of handling sea-bound imports, according to the ministry. Both are situated in the southwest of the country, far from the TPPs in the central and eastern regions that rely on coal from Donbass and Russia, and so transport costs would be higher.

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