Coal crunch forces Ukraine to seek Russian power supplies

Ukraine said Friday it had been forced to ask Russia to supply electricity to make up for energy shortages caused by the loss of control to pro-Moscow separatists of the coal-producing east.

But Energy Minister Volodymyr Demchyshyn said Ukraine’s giant neighbour was willing to help only if Kiev diverted some of the supplies to Crimea — a strategic peninsula that Russia invaded and annexed in March.

He did not say whether Kiev was ready to accept Moscow’s terms.

Both Ukraine and its Western allies refuse to recognise Russia’s seizure of Crimea, which they see as part of the Kremlin’s punishment for the February ouster of a Moscow-backed administration in Kiev.

“That is their condition,” Demchyshyn told reporters. “We are not importing any electricity from Russia right now.”

The former Soviet republic gets about 40 percent of its power from coal-fired plants and has traditionally had a surplus of the relatively inexpensive fossil fuel.

But the eight-month rebellion in the coal-rich and largely Russian-speaking provinces of Donetsk and Lugansk has shuttered many of the mines.

The insurgents have also curtailed deliveries of coal that is still being produced to the rest of Ukraine in the hope of forcing Kiev’s pro-European leaders to recognise their independence claim.

The coal shortage has compounded energy problems that began with Russia’s June decision to halt Ukraine’s natural gas supplies.

Ukraine says it may by this weekend make a down payment for the purchase of one billion cubic metres of Russian gas under a compromise agreement struck with the help of the European Union in late October.

Crimea had been dependent on mainland Ukraine’s power and water supplies prior to its seizure by Moscow.

Moscow has promised to invest vast sums in its crumbling infrastructure in order to sever its dependence on Ukraine and foster people’s trust in the Kremlin.

But the peninsula remains cut off from Russia by the Sea of Azov and cannot currently receive any energy from its new master.

– Rolling blackouts –

Kiev and other Ukrainian cities were forced on Monday to launch rolling blackouts that cut off electricity supplies to specific districts for a set number of hours each day.

“We had no other choice,” the energy minister said.

Demchyshyn called an idea raised in Ukraine media of having US coal shipments delivered to a port in the government-controlled Black Sea port of Odessa “interesting”.

Yet he stressed that no such negotiations with US companies had been held.

A deal for Kiev to purchase a million tonnes of South African coal fell apart after three deliveries in November because of a corruption scandal involving the Ukranian state energy firm.

State prosecutors in Kiev on Friday announced the arrest of the firm’s director on charges that his company ended up overpaying for South African coal whose quality was too poor to fuel Ukrainian country’s power plants.

The state energy firm had signed the South African deal after deciding not to pursue ones involving US and Australian coal companies.

Ukraine relies on coal for electricity and natural gas for heating.

The threat of power outages grew stronger when some private energy producers reported a disruption of their pre-paid coal supplies from Russia at the end of last month.

Officials in Moscow denied issuing orders for the state-run railway company to stop running the Ukrainian-bound coal trains.

But Demchyshyn said that around 500 railcars were currently stranded at the border in a region controlled by the Ukrainian separatist command.

“These train cars are paid for and delivered to the border. Their coal could be transformed into electricity within two days,” said the Ukrainian minister.

“But unfortunately, this is not happening.”

Ukraine was last reported to have purchased Russian electricity during a bitter cold snap in early 2012.