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Azarov: Ukraine will save $1.2 billion per year with coal projects

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Aug. 29, 2012, 1:53 p.m. | Business — by Interfax-Ukraine

The implementation of the first five projects replacing natural gas with domestically produced coal will enable Ukraine to cut its gas imports by over 3 billion cubic meters and save around $1.2 billion annually, Ukrainian Prime Minister Mykola Azarov (in the centre) told the government on Wednesday, Aug. 29.
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The implementation of the first five projects replacing natural gas with domestically produced coal will enable Ukraine to cut its gas imports by over 3 billion cubic meters and save around $1.2 billion annually, Ukrainian Prime Minister Mykola Azarov told the government on Wednesday, Aug. 29.

The government has signed a protocol on cooperation with China Development Bank on opening a special credit line and raising a total of more than $3.5 billion in loans for implementing such coal projects.

"With implementation of the first five projects under this agreement, one could expect such results as early as the next few years: a major strengthening of the country's energy security, further reduction of natural gas import by over 3 billion cubic meters and annual savings of up to $1.2 billion on average," the prime minister said.

Ukraine will also manage to save up to Hr 150 million in public funds because of the decreased subsidy of the price of gas used to produce thermal power for households, he said.

The implementation of these projects will ensure a stable market of up to 10 million tonnes of coal per year for domestic producers in the very near future, the prime minister said. Another result of the new projects will be the creation of up to 15,000 new jobs and retention of the existing ones, Azarov said.

In January-July 2012, Ukrainian coal miners produced over 50 million tonnes of coal, up 6% on the same period in 2011, the prime minister said.

Since the beginning of 2012, Ukraine's natural gas imports fell by almost 12 billion cubic meters, and its gas consumption, by almost 3 billion cubic meters in comparison with the same period in 2011, he said. "This is practically the result of a policy aimed at energy independence since the domestic coal and gas production simultaneously increased," the prime minister said.

The Cabinet has approved China Development Bank's $3.656 billion loan for Naftogaz Ukrainy for the implementation of the projects replacing imported natural gas with Ukrainian coal, the Ukrainian government's spokesperson said earlier.

The Verkhovna Rada allowed the provision of state guarantees on the Chinese loan of Hr 29.5 billion for the projects' implementation.

On July 13, 2012, the Ukrainian Energy and Coal Industry Ministry and China Development Bank signed a protocol of cooperation on switching from natural gas to coal consumption. The protocol stipulates the possibility of the Chinese bank opening a credit line to fund the projects to the total value of $3.656 billion, with the use of Chinese technologies.

A number of projects expected to be implemented under the program that will see national thermal power facilities switching to coal-water slurry fuel and the construction of lignite and bitumen gasification plants.

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