No state guarantees, no project

In December 2018, Dongfang Electric International Corporation signed a contract with PJSC Donbasenergo for an upgrade of the Sloviansk TPP* worth $ 684.296 million, with 70% of the financing to be provided through loans from the Bank of China. However, construction has not yet begun because the Chinese side is demanding state guarantees to provide the loan.

According to the contract, the Chinese are to build units 6A and 6B, 330 MW each, at the Sloviansk TPP, which will operate on low-grade coal.

An upgrade of the Sloviansk TPP should be financed through loans from the Bank of China. Source: Wikipedia

The project will use a new technology for Ukraine – burning solid fuel in a circulating fluidized bed. Unit 6B should be completed in July 2022, and Unit 6A a year later. During reconstruction 1500 workplaces will be created, and 350 people will operate the unit.

According to Donbasenergo CEO Eduard Bondarenko, this project is a serious precedent for Ukraine. For the past 30 years, nothing new has been built in Ukraine in coal generation.

However, in order to provide the loan, the Chinese demanded state guarantees from Ukraine. “The Chinese side is ready to invest more than $ 600 million in this project, provided the state guarantees are provided by the Ukrainian side,” said Liu Jun, Trade and Economic Affairs Advisor at the Chinese Embassy in Ukraine.

Later, Donbasenergo said that they have involved Ernst & Young to obtain the guarantees.

“We place our hopes on our partner in the process of obtaining a state guarantee for the project and providing state support,” said Eduard Bondarenko.

Also, according to Bondarenko, EY will help the construction contractor in negotiations with the Bank of China. Dongfang Electric International Corporation is currently evaluating the feasibility of the investment project.

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Dongfang Electric Corp. Ltd. engages in large-scale power equipment manufacturing, power project contracting, environmental protection engineering and power plant services. It operates its business through the following business segments: High Efficiency and Clean Energy Generation Products, New Energy, Hydro Power and Environmental Protection Equipment, Construction Services for Power Stations, and Others. The company was founded on December 28, 1993 and is headquartered in Chengdu, China.

According to Platts, in 2009-10 the company was the second largest manufacturer of steam turbines by worldwide market share, tied with Harbin Electric and slightly behind Shanghai Electric.

PJSC “Donbasenergo” is one of the largest producers of electricity in Ukraine. It has two thermal power plants – the Starobeshevo TPP located on the occupied territory in the east of the country and the Sloviansk TPP. Their total capacity is 2 880 MW.

The company also includes companies Donbasenergospetsremont, Donbasenergonaladka, Teploelektroproekt, Energotorg and others.

The Sloviansk thermal power plant is located in the north of Donetsk region in the city of Mykolaivka. Its planned capacity is 2100 MW, its actual capacity is 880 MW.

The TPP was launched in 1954. Construction was carried out in two stages. The first stage began in 1951. In 1954, Sloviansk TPP’s first turbine with a capacity of 100 MW was put into operation. The second phase of construction began in 1964. In 1967, the first power unit #6 was launched. In 1971, it was followed buy the second power unit, #7.

 

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