Energoatom chief recalls highs and lows of first half-year

12 August 2015

Ukraine's ability to manage the 2015-2016 heating season will depend on the ability of its nuclear power plants to cover winter peak load, Energoatom President Yuri Nedashkovsky said during a presentation of the state-run company's first-half financial results yesterday.

In a statement, the head of the nuclear power plant operator said: "We need to understand that today all the hopes of the country's leadership for the successful passage of the heating season are pinned on nuclear power, and we must meet those expectations."

In the first six months of this year, Ukraine's nuclear power units had a capacity or load factor of 74%, which was 3% more than in the same period of 2014. During the reporting period, four major and two regular maintenance works were carried out at the units. The total duration of these outages was 579.6 days. Nedashkovsky said that the company had managed to reduce the duration of maintenance outages by almost 20 days, compared with the same period last year, which enabled the production of an additional 269.2 gigawatt hours of electricity.

Work continues on the company's UAH 1.15 billion ($53.87 million) comprehensive safety program for its reactor fleet, with 88 measures to be carried out this year. As of 29 July, 37 of these 88 had been completed. Three of the units - South Ukraine 2, Zaporozhe 1 and Zaporozhe 2 - are undergoing work to extend their operating lives.

Nedashkovsky said: "We passed through the first half-year with over a billion [kilowatt hours] more than projected for our electricity production - 42 terawatt hours against 40.7 terawatt hours. But we must recognize that during that period there were some irregularities with the nuclear power plants, which prevented them from reaching their full capacity. This meant that, along with a shortage of coal and record-low water levels this summer, there is an acute shortage of electricity in Ukraine. To compensate for this deficit, [the country] has had to resort to expensive power imports from Russia, with which we are in actual fact at war."

But "the positives outweighed the negatives" in the reporting period, he added, and Energoatom managed to improve its financial position significantly, he said, with a net profit for January-June 2015 of UAH 2 billion ($93.7 million) compared with a net loss in the same period of 2014 of UAH 3.536 billion ($166 million).

"I hope that this result marks the start of Energoatom's financial recovery and that it will improve its investment attractiveness," Nedashkovsky said.

One negative feature of the period, however, was that the company could not proceed with its €600 million loan agreements with the European Bank for Reconstruction and Development (EBRD) and Euratom. "On the one hand, the reason is clear - the agreement with Euratom only came into force on 28 May - but there was also the matter of our shortcomings in the poor preparation of tender documents for the procurement of equipment for the EBRD loan agreement, which came into force at the end of last year," Nedashkovsky said.

Problems affecting nuclear power generation included Energorynok's "chronic" non-payment, he said. State enterprise Energorynok acts as the commercial operator and 'single buyer' in Ukraine's wholesale electricity market. During the reporting period, Energorynok paid Energoatom UAH 1.7 billion ($80 million), which was just less than 10% of the total value of the electricity it received. Repayments of its debt to Energoatom "virtually ceased", Nedashkovsky said.

An important issue for Energoatom, as for the whole country, he said, is the fight against corruption. The company has been working with the non-governmental organization Transparency International Ukraine since March, "on matters of methodological support in understanding the basic requirements of anti-corruption legislation", he said. In particular, training was arranged for the company's management on analysing each business unit's work to identify "corruption risks and manifestations".

In order to ensure the "swift detection of possible corruption offenses and a response to them", Energoatom operates an on-line "trust box" - a whistle-blower portal - and in the first six months of this year carried out 53 official investigations. These led to the prosecution of 48 people, the firing of four of its staff and on five occasions the company passed information on to law enforcement agencies.

Despite Energoatom's "significant advances" in the fight against corruption, Nedashkovsky faced the serious problem of a "flurry of allegations" by certain government agencies that were then repeated by the media. "There is no evidence to support these allegations and so we believe they were fabricated and aimed at destabilizing nuclear power generation," he said. On 7 July, during a meeting of an expanded board of the country's energy ministry, Ukrainian Prime Minister Arseniy Yatsenyuk drew attention to the "massive criticism" of Energoatom, including claims based on the findings of the State Financial Inspection of Ukraine.

"The Prime Minister agreed that the findings of violations regarding the company's operations were prejudicial," Nedashkovsky said.

Yatsenyuk ordered an independent audit of Energoatom's financial and economic activity to enable allegations of abuse and corruption to be lifted if they are proven to be false. "Pursuant to this order, Energoatom is preparing a package of tender documents for the selection of an auditor for two areas – issues related to Energoatom's procurement pricing procedure and to the conclusions of the State Financial Inspection of Ukraine's audit of Energoatom," Nedashkovsky said.

"I believe that before the end of the year we will have an objective assessment of how Energoatom actually conducted its financial and economic activity. I have no doubt that on the whole these findings will be in our favour, but I also know that we have a lot of shortcomings in the preparation of tenders and that this situation must be put right."

A highlight of the first half-year reporting period, he said, was the Cabinet of Ministers' 15 June decision to start a pilot project for a Ukraine-European Union Energy Bridge. As part of this project - to supply electricity from the Khmelnitski nuclear power plant to Poland and other EU countries - Energoatom aims to prepare and submit six projects for government approval.

These include a project to reconstruct the water supply system of the South Ukraine nuclear power plant and draft regulation on the allocation of land for the reconstruction of the 750 kV outdoor switchgear of the Zaporozhe plant.

Energoatom increased the share of nuclear energy in the country's electricity mix during the first six months of this year by 9.6 percentage points year on year to 56.6%. Net income from electricity sales amounted to UAH 15.588 ($730 million), an increase of 48.5%.

Researched and written
by World Nuclear News