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You're reading: Azarov: Ukraine will save $1.2 billion per year with coal projects

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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