Donbas coal blockade: 5 things you need to know

know

 

Analysis & Opinion

The blockade of coal supply from the temporarily occupied territories of Donetsk and Luhansk regions is a hot topic of last week’s political battles. Activists and politicians have been blocking few railroad hauls in Donetsk and Luhansk regions since January. This have hindered the supply of anthracite for Ukrainian thermal power plants. The government announces rolling blackouts and summons Anticrisis energy staff and admits the possibility of power cutoffs in 7 regions. 

Blockade organizers give their reasons. Blockade activists say that trading with the occupied areas is equal to trading on the blood. To officially cease commercial activities, a respective law needs to be adopted, it will stop the flows of money to “DNR” and “LNR”. In their opinion, the militants get their profits from commerce with Ukrainian companies.     

Read more: Ukrainian soldiers initiate trade blockade with occupied Donbas territories

Why it is problematic for Ukraine. Half of the power plants in Ukraine are fed by anthracite coal, another half by gas coal. The two types are not interchangeable. There has been an anthracite coal deficit in Ukraine since 2014. Anthracite can be supplied either from the occupied Donbas or import it from the Republic of South Africa, Australia, the US, and Vietnam. Attempts to set up imports based on competitive price have not been yet successful. On February 13, Ukraine’s deposits of anthracite reached 842 thousand tons, those of gas – 688 thousand tons. Heat power plants working on anthracite are burning 30 thousand tons of coal daily. Should the blockade spread to other railway lines and continue in time, the reserves will be enough for 20-40 days.

Why Ukraine should keep buying coal from the occupied areas – authorities present their motivation. Authorities are of the opinion that the blockade should be ceased as the country’s energy security is under a threat. Ukraine, indeed cannot generate heat and power it needs without domestic anthracite coal, that is extracted on the territories that the government currently does not control. Authorities also claim that they are not financing militants in such way. The coal is purchased from the companies registered in the government-controlled area. Coal mines de-facto located in the occupied areas are paying taxes to Ukraine’s budget, miners in the occupied areas get payment in hryvnia to bank accounts of Ukrainian banks.

What the authorities keep silent about. The blockade is a reminder for the authorities to keep the energy reform going. For over one year now experts and civil society have been calling for transparency in pricing for coal and power generated by heat power plants. They have been also requesting the authorities to report on the steps undertaken, in order to gradually refuse anthracite coal. The respective program was adopted in 2015. Following adoption of this program, electricity bills have gone up. Part of the coal was planned to be imported in order not to depend on the supplies from the non-controlled areas. The government has yet to respond to accusations as to alleged excessive profits by Poroshenko’s team and Akhmetov’s companies.

Read also: Will the makeshift blockade in Donbas hit the Russian-backed enclaves’ economy?

Rinat Akhmetov’s role. Anthracite power generation units account for about 15 percent of Ukraine’s electricity, and that is the exact part of the energy industry of Ukraine dependent on coal mining in the temporarily occupied areas of Donetsk and Luhansk regions. Back in 2015 a decision was made to convert anthracite power plants to gas coal. To get rid of anthracite dependency, Ukraine needed 2-3 years, and by summer 2017 the conversion would have been complete (excluding the rare cases of outdated units which are easier to destroy and replace with the new ones rather than convert to another power source). However, the state owns only 30 percent of Ukraine’s thermal power plants, while 70 percent of them are owned by Rinat Akhmetov’s DTEK company. Experts claim that Akhmetov managed to assure everyone that he was capable of providing the country with the necessary amount of energy, while the use of anthracite coal from the temporarily occupied areas of Donetsk and Luhansk regions was allegedly his personal problem. That is why the conversion process was put on hold. Due to the tariff escalation motivated by the non-existing diversification of energy supply by the imports, Akhmetov’s DTEK remains a monopolist, earns super profits and keeps the country dependent on the anthracite from the temporarily occupied areas of Donetsk and Luhansk regions, while Akhmetov refuses to read out the formula for prime cost of coal. Experts suggest that the anthracite might originate from illegal mines and be even cheaper than the one from legal mining enterprises.

Read also: Blood coal: oligarchs, terrorists and POW labor in Russo-Ukrainian war

Source: uacrisis.org

Tags: , , ,

  • Dagwood Bumstead

    The answer is, perhaps, to introduce a bill in the Rada to nationalise Akhmetov’s power plants. With Akhmetov no longer able to obstruct, the plants should converted ASAP.

    • veth

      And bring the traitor to court.

  • Miroslav Bogunovski

    News: the breakaway republic’s have just made a law which forces all Ukrainian companys working in Donbass to pay taxes to Donbas. In case they refuse, their assets will be temporarily nationalized until money is paid in full.

    • veth

      THESE REPUBLICS DON’T EXIST.

      • Mykola Potytorsky

        totally fake

        • veth

          Donbass is Ukraine, occupation by nazzi-troops from Russia does not change the legal status.
          Like Crimea is Ukraine..
          Only nazzi say Donbass and Crimea are Russia………

    • Alex George

      Looks like they realise the game is up – they have been running a double-game with Kremlin-sympathisers among the Ukrainian oligarchs, but it is being exposed.

      Once the tap of bribes is turned off, they may as well seize the assets of Akhmetov etc, not that it will do them much good.

      • Dagwood Bumstead

        Those assets of Akhmetov’s, Pinchuk’s etc will be stripped of anything useful, and the useful stuff carted off to Dwarfstan, where it will either be scrapped or used by Dwarfstanian companies. The result is further devastation in the so-called LNR and DNR, increasing Kyiv’s problems after liberation.
        This only shows that the dwarf has no intention to retain the occupied areas whatsoever. He knows he will have to give them up sooner or later.
        Here’s a Polish article that shows the devastation of the dwarf’s locusts. Note that it is over a year old and can probably be expanded now, also that it only refers to the so-called LNR. A similar list can no doubt be drawn up for the so-called DNR. It’s basically repeating what Stalin’s hordes did all over Eastern Europe, not only in Germany- even Poland, supposedly an ally, saw its territory plundered.

        http://kresy24.pl/zobacz-co-rosja-zrabowala-ukraincom-z-donbasu-rozkradli-wszystko-do-golej-ziemi/

    • Brent

      “Nationalized”…..like Zakharchenko, Plotnitsky, and Aksyonov have “nationalized” so many private Ukrianian companies for themselves?

      YOU NEED TO WAKE UP TO THE REALITY OF WHAT RUSSIA IS DOING AND STOP BEING A STOOGE SPREADING RUSSIA’S LIES AND PROPAGANDA.

      http://euromaidanpress.com/2015/08/28/donbosses-rebel-leaders-in-control-of-donetsks-economy-infographic/

      http://khpg.org/index.php?id=1440447628

      http://khpg.org/index.php?id=1437044730

      http://www.businessinsider.com/crimeas-new-russian-overlords-are-seizing-thousands-of-businesses-2014-12

  • NickL

    Put Akhmetov against a wall and shoot him as a warning to the other Oligarchs to stop raping the country. If that doesn’t work then shoot Poroshenko as an example that no Oligarch is safe.

    • Dagwood Bumstead

      Assassinating Akhmetov or one of the other leading oligarch thugs- Pinchuk, Boiko, Firtash- as a warning should be enough.

      • Alex George

        Any word yet on who fed Kononenko mercury?

      • Andrew Chmil

        With their –ILL GOTTEN– assets nationalized.

        • Dagwood Bumstead

          That’s precisely what Yulia tried to do when she became Prime Minister in 2005, but she was constantly thwarted by Yushchenko.

          • Andrew Chmil

            Didn’t know that…. Hmm…

          • Dagwood Bumstead

            Briefly: in 2004, when Kuchma was president and Proffessor Viktor was Prime Minister KrivyiRihStal, one of the country’s largest and most modern steel plants, was “privatised” in a shady deal, being “sold” to Akhmetov and Pinchuk for $800 million, far below the plant’s real value. Nobody else was allowed to bid, and no doubt PV got a “small fee” for his “cooperation” in setting up the “privatisation”.
            When Yulia became PM in 2005 after the 2004 Orange Revolution she immediately cancelled the “privatisation” and offered KrivyiRihStal for sale in a transparent public auction. The end result: KrivyiRihStal was bought by Mittal Steel for $3.8 billion, a cool $3 billion more for the State
            Treasury than what Akhmetov and Pinchuk paid. This made Yulia the enemy of Akhmetov and Pinchuk- if she wasn’t already.

            Shortly afterwards, there was a meeting between president Yushchenko and leading Ukrainian business figures; Yulia was also present. Yushchenko was asked whether there would be any further cancelling of “privatisations”, and Yushchenko said that he had 5 or 6 in mind, but no more than that. Yulia interrupted Yushchenko and said that she had a list of over 500(!!!) privatisations she wanted to examine and cancel if proved dubious in any way.

            The silence, as they say, was deafening.

            After that, Yushchenko and Yulia were at war, resulting at one point in Yushchenko sacking her and replacing her with PV, though she returned as PM after about a year.

          • Andrew Chmil

            “in a shady deal, being “sold” to Akhmetov and Pinchuk for $800 million, far below the plant’s real value….”

            Yeah … read about that….

            “Shortly afterwards, there was a meeting between president Yushchenko and leading Ukrainian business figures; Yulia was also present. Yushchenko was asked whether there would be any further cancelling of “privatisations”, and Yushchenko said that he had 5 or 6 in mind, but no more than that. Yulia interrupted Yushchenko and said that she had a list of over 500(!!!) privatisations she wanted to examine and cancel if proved dubious in any way.The silence, as they say, was deafening”

            — THE ABOVE I DID *NOT* KNOW AT ALL!!!

            Hmm… but I have heard …. from Jews & others — how “corrupt” Yulia was…. nevermind that the former “gas princess” WAS/IS patriotic & that Yanukovych put her in jail after that “very close election” …. Now I know a lot more… Alex Motyl NEVER mentioned EVER the REASON for that animosity between her & Yanukovych…. That explains a great deal…. Of course Putin preferred Yanuk. to Tymoshenko… as would the Jews, commies etc… I have no time for BS “political correctness”.

            Kuchma was/is a murdering scumbag… Jew Pinchuk married Kuchma’s good looking blonde daughter & certainly has no loyalty to Ukraine…

            Thanks!…

          • Dagwood Bumstead

            What happened at that business meeting is not widely known; I read about it on the Kyiv Post website a few years ago. It is certainly ONE of the reasons Yulia and Yushchenko did not see eye to eye, though they probably had quite different opinions on other matters as well.
            Yulia also made an enemy of Firtash in 2009. During the Gas Dispute with Dwarfstan, the dwarf (who was PM of Dwarfstan at the time) and Yulia agreed to cut out the middleman RosUkrEnergo, a Firtash company. It bought gas from Gazprom and sold it on to the Ukraine, raking in millions for, in effect, doing nothing useful. As one can imagine, Firtash did not like that one bit!
            Yushchenko called Yulia “Moscow’s candidate” during the 2014 presidential election. Rather an odd description of someone who is opposed to Ukrainian membership of Pedo Putolini’s Eurasian Customs Union and a firm supporter of Ukrainian membership of both NATO and EU.

          • Andrew Chmil

            Hmm …. your knowledge here is far greater than mine.

            $$$ WARS … & “alliances” … Common sense I suppose.

            Strange that Alex Motyl NEVER spoke of anything about this.
            Perhaps not …

            Much thanks!

            BTW — Ukraine Today USA is a TROLL & MOLE site.

            Ruski are using Disqus Channels … More control … cheap .. they can “moderate it.

            Got kicked off the Disqus “The President Trump Channel” :)
            Told a troll not to Ruski talk me — didn’t wanna hear it.
            Instant “BAN” :)

            Some info for you possibly on my FB page:

            https://www.facebook.com/andrew.chmilewsky

          • Dagwood Bumstead

            Regarding Yulia being “corrupt”, I’d be the last to suggest she’s 100% squeaky clean. But she was investigated twice by her political opponents; first by Kuchma in the late 1990s, when she was suspected of financial irregularities. The end result of the investigation, however, was zero.
            The second time was under Proffesor Viktor. After the Neo-Stalinist show trial of 2011, Yulia was investigated for ANYTHING, even her supposed role in the Gongadze murder which shows how PV’s prosecution was grasping at straws. I remember reading how one commentator said he wouldn’t be surprised if she were accused of involvement in the murder of JFK. But she was not brought to trialfor even ONE irregularity. And when PV was kicked out the investigations collapsed.

  • veth

    Gruesome tally of Russia’s aggression against Ukraine – foreign ministry
    Russia began its armed aggression against Ukraine on Feb. 20, 2014 despite the fact that it was one of the guarantors of Ukraine’s integrity and sovereignty under the 1994 Budapest treaty, runs the Feb. 20 statement by Ukraine foreign ministry.

    The Russian occupation led to the annexation of Crimea and bloodshed in Donbas.

    Doing this, Russia has challenged the existing world order based on democratic values. Russia wants to restore the geopolitical constructions of the past dominated by the right of force and division of the world into the spheres of influence.

    Russia’s barbaric policy against the Ukrainian people resulted in 9,800 killed and 23,000 wounded. The number of refugees
    From Donbas and Crimea has reached 1.8 million.

    Russia annexed and occupied 7.2% of Ukraine’s territory.

    Russia has launched a merciless russification of Crimea, trying to banish Crimean Tatars and Ukrainians from the peninsula and resettling Russians to Crimea, the foreign ministry statement runs.

    Russiangruesomeoccupationtally Читайте більше тут: http://zik.ua/en/news/2017/02/20/gruesome_tally_of_russias_aggression_against_ukraine__foreign_ministry_1047285

  • veth

    http://qha.com.ua/resim//2017/02/17/df3a12d038f99001fd70d0397fd5a992.jpg

    The Russian Buk SYSTEM of the Kursk Brigade WHICH DOWNED MH17. New released photo.

    • Mick Servian

      They would laugh you out of a court of law.
      “Qui bono” here?
      And why did the Ukrainian authorities allow a passenger plane over a warzone?

  • Alex George

    “The government has yet to respond to accusations as to alleged excessive profits by Poroshenko’s team and Akhmetov’s companies.”

    Indeed. And others. But this has now caught up with them. There are many people in Ukraione who will not be silenced, and whose patience will not last forever – as we are now seeing.

    The blockade is a popular movement. Many people are involved in it, including many veterans. Who is Poroshenko going to use to break it – other veterans? The SBU is not reliable for him, since the previous head of SBU sacked many of the old guard and filled its ranks with Maidan protesters.

    • Dagwood Bumstead

      Note also that the electricity blockade of the Crimea only started after activists started sabotaging the power supply from the mainland to the peninsula. Presumably several oligarchs, most notably Firtash, needed the power to keep their Crimean businesses running.

  • Murf

    While I am concerned about Ukraine’s energy security this blockade is a prime example of what separates Ukraine from Russia.

  • Dagwood Bumstead

    Austrian court arrests Firtash on Spanish warrant, grants US request to extradite:

    https://www.kyivpost.com/ukraine-politics/extradition-hearing-dmytro-firtash-starts-vienna-court-appeals-update.html

    If the Austrian decision to extradite Firtash to the US to face bribery charges is upheld, that’s one Ukrainian oligarch in Serious Trouble. Good!

    • gmab

      And quite possibly his Mafia cohorts as well. Imagine the chaos in Putin’s chambers right about now! lol