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Study on Economic Partnership Projects in Developing Countries in FY2013
Study on Dobrotvirska Coal-Fired Power Extension Project in
Dobrotvirska, Ukraine
Final Report
February 2014
Prepared for:
The Ministry of Economy, Trade and Industry Ernst & Young ShinNihon LLC
Japan External Trade Organization
Prepared by: ITOCHU Corporation
Tokyo Electric Power Services Co., Ltd.
Reproduction Prohibited
Preface
This report summarizes the study being prepared for Study on Economic Partnership Projects in Developing
Countries in FY 2013 commissioned by the Ministry of Economy, Trade and Industry.
This Study, “Study on Dobrovirska Coal-Fired Power Extension Project in Dobrotvirska, Ukraine”, was made in
order to examine the viability of the project to construct 600MW Ultra-Supercritical Coal-Fired Thermal Power
Plant at the existing power plants site with the cost of United State Dollar 870 million, for the purpose of
efficiency improvement and reducing emission of Sulfur Oxide, Nitrogen Oxide and dust.
We hope that the report will be helpful for the realization of the project and be of reference to all the members
concerned.
February 2014
ITOCHU Corporation
Tokyo Electric Services Co., Ltd.
Project Site Map
Source: prepared by the Study team based on Google Map
List of Abbreviation
Abbreviation Full Name
B/C Benefit Cost Ratio
BOP Balance of Plant
CCS Carbon Dioxide Capture and Storage
CDM Clean Development Mechanism
CFB Circulation Fluidaized Bed
CFD Contract for Difference
CHPP Combined Heat and Power Plant
CIS Commonwealth of Independent States
CO２ Carbon Dioxide
COD Commercial Operation Date
CPM Capacity Payment Mechanism
℃ Degree Celsius
DBJ Development Bank of Japan, Inc.
Dob TPP Dobrotvirska Thermal Power Plant
DTEK Donbass Fuel-Energy Company
EBITDA Earnings Before Interest, Taxes, Depreciation, and Amortization
EBRD European Bank for Reconstruction and Development
EC European Comission
EcoNet Ecological Network
ECU Energy Company of Ukraine
EFF Extended Fund Facility
EHS Environmental, Health and Safety
EIA Environmental Impact Assessment
EIB European Investment Bank
EIRR Economic Internal Rate of Return
ENTSO-E European Network of Transmission System Operators for Electricity
EOJ Embassy of Japan
EPC Engineering, Procurement and Construction
ESIA Environmental Social Impact Assessment
ESP Electrostatic Precipitator
EU European Union
EUR Euro
FD Forced Draft
FGD Flue-gas Desulphurization
FIRR Financial Internal Rate of Return
FIT Feed in Tariff
F/S Feasibility Study
FSA Fuel Supply Agreement
g Gram
GDP Gross Domestic Production
GFATM The Global Fund to Fight AIDS, Tuberculosis and Malaria
GIS Green Investment Scheme
GW Giga Watt (1GW = 1,000,000. kilo Watt)
GWh Giga Watt hour (1GWh = 1,000,000.kilo Watt hour)
ha Hectare (1ha = 100a = 10,000m2)
HP High Pressure
Hydromet State Hydro meteorological Service
I&C Instrumentation and Control
IBRD International Bank for Reconstruction and Development
IDC Interest during the Construction
IDF Induced Draft Fan
IMF International Monetary Fund
IP Intermediate Pressure
IPP Independent Power Producer
JBIC Japan Bank for International Cooperation
JETRO Japan External Trade Organization
JICA Japan International Cooperation Agency
JOGMEC Japan Oil, Gas and Metals National Corporation
JPY Japanese Yen
km kilo meter (1km = 1,000 meter)
km2 square kilo meter (1km2 = 1,000,000 m2)
kt kilo ton
kV kilo Voltage (1kV = 1,000 V)
kW kilo Watt (1kW = 1,000W)
kWh kilo Watt hour (1kWh = 1,000Wh)
LHV Lower Heating Value
LP Low Pressure
m Meter
m3 cubic meter
MAC Maximum Allowable Concentration
mm Millimeter (1mm = 1/1,000mt)
MECI Ministry of Energy and Coal Industry
MENR Ministry of Environment and Natural Resources
MEP Ministry of Environmental Protection
METI Ministry of Economy, Trade and Industry
mm Millimeter
MPa Mega Pascal
MW Mega Watt (1MW = 1,000,000 Watt)
MWh Mega Watt hour (1MWh = 1,000,000 Watt hour)
NATO North Atlantic Treaty Organization
NEDO New Energy and Industrial Technology Development Organization
NERC National Electricity Regulatory Commission
NEXI Nippon Export and Investment Insurance
NIS New Independent States
NOx Nitrogen Oxides
NPV Net Present Value
NTP Notice to Proceed
ODA Official Development Assistance
OECD Organization for Economic Co-operation and Development
O&M Operation and Maintenance
PM Particle Matter
PPA Power Purchase Agreement
RUB Russian Ruble
SC Super Critical
SCM System Capital Management
SCR Selective Catalytic Reduction
SDR Special Drawing Rights
SEE State Ecological Enterprises
SO2 Sulfur Dioxide
SOx Sulfur Oxides
S/S Sub-station
t Ton
T/L Transmission Line
TPP(s) Thermal Power Plant(s)
TSO Transmission System Operator
TWh Tera Watt hour
UAH hryvnia
UK United Kingdom
UN United Nations
USA United States of America
USC Ultra-Super Critical
US$ United States dollar
V Voltage
VAT Value Added Tax
WB World Bank
WEM Wholesale Electricity Market
WTO World Trade Organization
Table of Contents
Preface
Project Site Map
List of Abbreviations
Table of Contents
Executive Summary
(1) Background and Necessity of the Project ················································································ S-1
1) Background of the Project ······························································································· S-1
2) Necessity of the Project ·································································································· S-1
(2) Basic Policy of Project Scope Determination ··········································································· S-2
1) Basic Policy of Project Scope Determination ········································································· S-2
2) Conceptual Design and the applicable Specification································································· S-2
(3) Overview of the Project Plan ······························································································ S-3
1) Project Scope ·············································································································· S-3
2) Project Cost Estimation ·································································································· S-5
3) Outline of Preliminary Financial and Economic Evaluation ························································ S-7
4) Evaluation of Environmental and Social Impacts ···································································· S-9
(4) Planned Project Schedule ································································································· S-11
(5) Feasibility of the Project Implementation ·············································································· S-12
(6) Advance on the Technical Aspect of Japanese Companies ·························································· S-13
(7) Map of the Project Area in the Country ················································································· S-14
Chapter 1 Overview of the Host Country and Sector
(1) Economic and Fiscal Situation in Ukraine ·············································································· 1-1
1) General Information ······································································································ 1-1
a) Geography and Climate ······························································································· 1-1
b) Brief History of Ukraine ······························································································ 1-3
c) Domestic Affairs ······································································································ 1-4
d) Foreign Relations ······································································································ 1-5
e) Social Circumstances ·································································································· 1-5
2) Economic and Fiscal Conditions ························································································ 1-7
a) Economic Overview ··································································································· 1-7
b) Brief Economic History ······························································································· 1-8
c) Issues related to Supply of Natural Gas and Crude Oil from Russia ··········································· 1-10
d) The Relation with IMF ······························································································· 1-11
e) External Debt Problems ······························································································ 1-12
f) The Trend of Trade and Investment ················································································ 1-12
g) The Prime Industries and their Challenges ········································································ 1-15
3) Economic Assistance ···································································································· 1-19
(2) Overview of the Power Sector ·························································································· 1-20
1) Power Sector in Ukraine ································································································ 1-20
2) Overview of Thermal Power Generation Sector ····································································· 1-34
(3) Situation in the Target Area ······························································································ 1-40
Chapter 2 Study Methodology
(1) Content of the Study ········································································································ 2-1
1) Outline of the Study ······································································································ 2-1
2) Target Fields ··············································································································· 2-2
(2) Method of the Study and Team Members ··············································································· 2-3
1) Method of the Study ······································································································ 2-3
2) Team Member and Organization ······················································································· 2-4
3) Supporting Organization in Ukraine ··················································································· 2-4
(3) Study Schedule ·············································································································· 2-5
1) The 1st Mission ·········································································································· 2-5
2) The 2nd Mission ·········································································································· 2-8
3) The 3rd Mission ·········································································································· 2-11
4) The 4th Mission ·········································································································· 2-12
5) The 5th Mission ·········································································································· 2-13
6) Persons Interviewed during the Study················································································· 2-14
Chapter 3 Justification, Objectives and Technical Feasibility of the Project
(1) Background and Necessity of the Project ················································································ 3-1
1) Scope of the Project ······································································································· 3-1
2) Analysis of the Present Situation and Future Forecast ······························································· 3-3
3) Effect caused by the Project Implementation ········································································· 3-5
4) Comparison with other Options ························································································· 3-5
a) Alternative 1: Natural Gas-fired Power Plants ····································································· 3-5
b) Alternative 2: Coal-fired Power Plants (Sub-critical type) ······················································· 3-6
c) Alternative 3: Imported Capacity to be increased (No new power plant) ······································ 3-6
d) Alternative 4: Renewable Energy ···················································································· 3-6
(2) Efficiency and Rationalization of Energy Usage ······································································· 3-8
(3) Various Types of Studies required for the Decision of Project Scope ··············································· 3-9
1) Demand Forecast ·········································································································· 3-9
2) Necessary Analysis of Problems for the Appraisal and Determination of Project Scope ···················· 3-9
a) Technical Aspects ······································································································ 3-9
b) Environmental Aspects ······························································································· 3-10
c) Financial and Economic Aspects ··················································································· 3-11
d) Project Development Aspects ······················································································· 3-12
3) Study of Engineering Practice ·························································································· 3-13
(4) Overview of the Project Plan ····························································································· 3-14
1) Basic Policy of Project Scope Determination ········································································ 3-14
a) Project Scope and Study of the Technical Aspects ······························································· 3-14
b) Environmental and Social Considerations ········································································· 3-14
c) Financial and Economic Analysis ·················································································· 3-14
2) Conceptual Design and the Applicable Specification ······························································· 3-14
a) Boiler and Auxiliaries ································································································ 3-15
b) Turbine ················································································································· 3-18
c) Steam Turbine Auxiliary Machine ·················································································· 3-19
d) Generator ··············································································································· 3-21
e) Generator Auxiliary Machines ······················································································ 3-22
f) Instrument and Control System ······················································································ 3-23
g) Air Quality Control System-AQCS ················································································ 3-26
3) Overview of the proposed Project ····················································································· 3-28
4) Solutions for the proposed Technologies and Systems Adoption ················································· 3-29
Chapter 4 Evaluation of Environmental and Social Impacts
(1) Analysis of the Current Status of the Environmental and Social Aspects ·········································· 4-1
1) Location of the Project Site ······························································································ 4-1
2) Natural Environment ····································································································· 4-2
a) Meteorology ············································································································ 4-2
b) Geography··············································································································· 4-3
c) Rivers ···················································································································· 4-3
d) Ecosystem ··············································································································· 4-3
3) Environmental Pollution ································································································· 4-6
a) Air Quality ·············································································································· 4-6
b) Water Quality ··········································································································· 4-6
c) Noise ····················································································································· 4-7
d) Waste ···················································································································· 4-7
4) Social Environment ······································································································· 4-8
a) Land Use ················································································································ 4-8
b) Social Infrastructure ··································································································· 4-8
c) Traffic ···················································································································· 4-8
(2) Environment Improvement Effects by Project Implementation ······················································ 4-9
1) Environmental Mitigation Measures for Air Quality ································································ 4-9
2) Atmospheric Diffusion Estimation of Air Pollutants ······························································· 4-10
a) Calculation Formula ·································································································· 4-10
b) Calculation Conditions ······························································································· 4-11
c) Meteorological Conditions ··························································································· 4-11
d) Exhaust Emission Conditions ······················································································· 4-12
e) Calculation Results ···································································································· 4-13
(3) Environmental and Social Impacts of the Project Implementation ················································· 4-27
1) JICA Guidelines ·········································································································· 4-27
2) Review Results of Environmental and Social Consideration ······················································ 4-27
(4) Overview of the Laws and Regulations concerning Environmental-Social Considerations of
the Host Country and the Measures needed for Clearing ···························································· 4-34
1) Environmental Administration in Ukraine ··········································································· 4-34
2) Environmental Laws and Regulations in Ukraine ··································································· 4-35
a) Environmental Protection Law ······················································································ 4-35
b) Law on the Protection of Atmospheric Air ········································································ 4-35
c) Water Quality Regulations ··························································································· 4-37
d) Noise ···················································································································· 4-38
e) Natural Environmental Protection ·················································································· 4-38
f) Hazardous Materials and Waste Management ···································································· 4-39
3) Outline of the EIA of the Host Country needed for the Project Implementation
and the Measures to be taken ·························································································· 4-39
a) EIA in Ukraine ········································································································ 4-39
b) Measures to be taken for the EIA ··················································································· 4-40
(5) The Requirement for the Host Country (Project Proponent and other related Organizations)
for the Implementation of the Project ··················································································· 4-42
Chapter 5 Financial and Economic Evaluation
(1) Project Cost Estimation ···································································································· 5-1
1) Construction Cost (Engineering, Procurement and Construction) ················································· 5-1
2) Initial Investment Cost ··································································································· 5-1
3) Running Cost ·············································································································· 5-2
(2) Preliminaly Financial and Economic Evaluation ······································································· 5-3
1) Financial Internal Rate of Return (FIRR) ·············································································· 5-3
2) Economic Internal Rate of return (EIRR) ············································································· 5-5
3) Sensibility of EIRR ······································································································· 5-8
a) Selling Price ············································································································· 5-8
b) EPC Cost ················································································································ 5-8
c) O&M Cost ··············································································································· 5-9
d) Fuel Cost ················································································································ 5-9
e) Plant Availability ······································································································ 5-10
f) Plant Efficiency ········································································································ 5-10
4) Comparative Verification with Alternative ··········································································· 5-11
5) Conclusion ················································································································ 5-12
Chapter 6 Planned Project Schedule ......................................................................................................................... 6-1
Chapter 7 Implementing Organizations
(1) Power Sector in Ukraine ··································································································· 7-1
1) Power Sector ··············································································································· 7-1
a) The Ministry of Energy and Coal Industry ········································································· 7-2
b) National Electricity Regulatory Commission ······································································ 7-2
c) Thermal Power Generation Companies ············································································· 7-2
d) Hydraulic Power Generation Companies ··········································································· 7-2
e) Nuclear Power Generation Company ··············································································· 7-2
f) Wholesale of Electricity, Transmission and Distribution Companies ··········································· 7-2
2) Privatization ·············································································································· 7-3
3) Zakhidenergo (the West Thermal Power Generation Company) ··················································· 7-3
(2) DTEK ························································································································· 7-5
1) General ····················································································································· 7-5
2) Coal Mining and Preparation ···························································································· 7-5
3) Electrical Power Generation ····························································································· 7-6
4) Electrical Power Sales and Supply ····················································································· 7-6
5) Key Production Indicators ······························································································· 7-6
6) Financial Performance ···································································································· 7-8
(3) Evaluation of Implementing Organizations ············································································· 7-9
1) Technical and Human Resources Aspects ··········································································· 7-9
2) Financial Arrangements ································································································· 7-10
Chapter 8 Technical Advantages of Japanese Companies
(1) Expected Formation of Japanese Companies’ Participation ·························································· 8-1
1) Equity Participation ······································································································· 8-1
2) Engineering, Procurement and Construction (EPC) ·································································· 8-1
3) Operation and Maintenance (O&M) ··················································································· 8-1
4) Fuel Supply ················································································································ 8-1
(2) Advantages of Japanese Companies on the Project ···································································· 8-3
1) Advantages in Technical Aspect ························································································ 8-3
2) Advantages in Economic Aspect ······················································································· 8-4
a) New Policies of US and European Financial Institutions ························································ 8-4
b) Policy of Japanese Government and Official Bodies in Japan··················································· 8-5
(3) Mesures Required to Promote Orders to Japanese Companies ······················································· 8-6
Executive Summary
S-1
(1) Background and Necessity of the Project
1） Background of the Project
Project site has been prepared for the former expansion plan (225 Mega Watt (MW) x 3 units) in the existing
Dobrotvirska coal-fired thermal power plant (TPP). This new project for No.9 unit is planned to adopt more
efficient, ultra-supercritical (USC) technology (main steam temperature: 600 oC, main steam pressure: 26.4 Mega
Pascal (MPa)). The USC installation promotes Japanese manufacture’s participation on this project and reduces
the emission of greenhouse gas such as carbon dioxide.
2） Necessity of the Project
It is supposed to export the generating power from the new power plant to Poland. As a result, this project is
expected to contribute to the acquisition of foreign currency for Ukraine.
In Poland, existing power plants of 6,000 MW installed capacity are forced to shut down by 2017 in order to
achieve the EU environmental directives. It causes power supply shortage in 2016-2017 and power supply
shortage in winter season in 2017 to be assumed to as 1,100 MW. Therefore, it is possible to contribute to the
power supply stabilization of Poland by this project.
Also it is possible to contribute to the power supply stabilization of domestic power system in Ukraine by
connecting to domestic power system. As the result this project contributes economic activity.
In addition if the domestic power demand is increasing as planned then enhancement of power supply system is
necessary. The current power supply system will be insufficient in the future. But independence on importing
power influences on instability of power demand and supply balance and is not effective in utilization of domestic
natural resource. As a consequence USC power plant installation is essential for the environment prevention and
the effective use of domestic natural resources.
Also if the growth in demand is stagnant in the future, then the new power plant is utilized as base load supplier
instead of old existing power plants and there is no need to install environmental facility to existing old power
plants and it is possible to reduce operation and maintenance costs. It contributes to the economic and financial
improvement.
S-2
(2) Basic Policy of Project Scope Determination
1） Basic Policy of Project Scope Determination
a) Project scope and study of the technical aspects
Data acquisition and analysis of power sector
Investigation of existing power plant, substation and transmission line and coal properties for the
specification of this project
Conceptual design based on the above specification
b) Environmental and social considerations
Impact on the social environment of the project: Investigation of land acquisition, promotion of
employment, economic benefit effect, greenhouse gas reduction, per impact on other social environment
due to the project construction
Investigation of permission from government, environmental impact assessment, related laws and
regulations
c) Financial and economic analysis
Integration of the construction costs based on the proposed specification
Integration of the financial and economic analysis for the business profitability to examine the scheme from
electricity sales
2） Conceptual Design and the applicable Specification
Japanese manufacturers have constructed a lot of USC power plants in Japan and other foreign countries so far.
The followings are the main equipment for this project.
USC boiler
Steam turbine and generator equipment
Environmental facilities (electrostatic precipitator, desulfurization and denitrification equipment, etc.)
Ancillary equipment (outdoor equipment, etc.)
Electrical and Instrumentation and Control (I&C) equipment
Heat supply is expected to be sent from existing power plant to the district. Heat supply system that is typically
required in the European market is not prepared by this project.
S-3
(3) Overview of the Project Plan
1) Project Scope
Project site has been prepared for the former expansion plan (225 MW x 3 units) in the existing Dobrotvirska
coal-fired power plant. This new project for No.9 unit is planned to adopt more efficient USC technology (main
steam temperature: 600 ℃, main steam pressure: 26.4 MPa). The installation of USC technology advances
Japanese manufacture’s participation on this project and reduce the emission of greenhouse gas such as carbon
dioxide.
Major equipment of the new plant is composed of USC pressure boiler and steam turbine generator equipment.
The others are composed of the following equipment.
Boiler auxiliary equipment (Regenerative air heater, Forced draft fan, Induced draft fan (IDF), Primary air
fan, Coal mill, etc.)
Turbine auxiliary equipment (Condenser, Boiler feed pump, Condensate pump, Condensate booster pump,
Circulating water pump, Low pressure feed water heater, Deaerator, High pressure feed water heater,
Condensate polishing equipment, etc.)
Generator auxiliary equipment (Seal oil system, Cooling system, etc.)
Electrical equipment
C&I equipment
Environmental facilities (Electrostatic Precipitator (ESP), Flue-gas Desulfurization (FGD) equipment,
Denitrification equipment, etc.)
Compressed air equipment
Water treatment facilities
Wastewater treatment facilities
Ash handling facilities
Cooling water equipment
Coal handling equipment
Limestone handling equipment
Gypsum handling equipment
Fire prevention equipment, etc.
S-4
Table 1 shows scope of works for this project.
Table 1 Scope of Works
Item Contents
Name Dobrotvirska Power Plant
Unit No. 9
Scope of Works
Coal-fired power plant construction work
Civil engineering work
Detailed design of coal-fired power plant
Engineering, procurement and construction work for boilers, boiler auxiliaries, turbine,
turbine auxiliary, generator, generator auxiliary, electrical, I&C, environmental,
compressed air, cooling water, coal and ash handling, limestone handling, gypsum
handling, and fire prevention equipment
Commissioning of the power plant
Consulting work
Out of Scope
For these terms, it is assumed to be implemented by local jurisdiction.
Development costs of coal mine
Removal and relocation work associated with this project
(Source: prepared by the Study Team)
S-5
2) Project Cost Estimation
The Construction (Engineering, Procurement and Construction: EPC) cost, the initial investment cost and the
running cost are estimated as the following Tables with the conversion rate of United States dollar (US$) 1=
Ukrainian hryvnia (currency code: UAH) 8.20.
Table 2 EPC Cost of 600MW USC Coal-Fired TPP
Item Cost Breakdown
Foreign (US$ mil) Local (UAH mil.) Total (US$ mil)
1 Boiler & Environmental Equipment 311.8 188.0 334.7
2 Steam Turbine Generator 213.2 56.4 220.1
3 Coal & Ash Handling Systems 73.4 56.4 80.2
4 I&C and Electrical Equipment 59.6 18.8 61.9
5 Mechanical Equipment 87.1 56.4 94.0
6 Civil & Installation Works incl. in the above incl. in the above incl. in the above
7 Sub-total 745.1 376.0 790.9
8 Contingency (10% of Sub-total） 74.5 37.6 79.1
9 Total 819.6 413.6 870.0
(Source: prepared by the Study Team)
Table 3 Initial Investment Cost
Item Remarks Cost Breakdown
Foreign (US$ mil) Local (UAH mil) Total (US$ mil)
1 EPC Table 2 above 819.6 413.6 870.0
2 S/S and T/L T/L length: 20km 10.0 82.0 20.0
3 Other Costs 5% of (1+2 ) 41.5 24.8 44.5
4 IDC Table 5-3 50.5 0.0 50.5
Total 921.6 520.4 985.0
Sub-station (S/S)
Transmission Line (T/L)
Interest during Construction (IDC)
(Source: prepared by the Study Team)
S-6
Table 4 Running Cost
Item Annual Cost
Foreign (US$ mil/year) Local (UAH mil/year) Total (US$ mil/year)
1 O&M Cost 10.0 164.0 30.0
2 Fuel Cost 0.0 1,303.8 159.0
3 Land Cost 0.0 0.0 0.0
4 Insurances included in O&M Cost included in O&M Cost included in O&M Cost
5 Interest Rate 3.00% 0.0 3.00%
6 Corporate Tax 0.0 16% 16%
Operation and Maintenance (O&M)
(Source: prepared by the Study Team)
S-7
3) Outline of Preliminary Financial and Economic Evaluation
Preliminary Financial and Economic Evaluation is made with the following preconditions.
Table 5 Preconditions for Preliminary Financial and Economic Evaluation
Item Condition
1 Selling Price US$60 per Mega Watt hour (MWh)
2 Annual Operation Hours 7,440hours (24hours/d x 310 days)
3 Plant Efficiency 41%
4 Own Use of Electricity 7.8%
5 Calorific Value of Coal 5,750kcal/kg
6 Coal Price US$ 90/ton (t)
7 Inflation Rate 2.39%
8 Construction Period 5 years
9 Depreciation 40 years, equal amount, residual value zero
10 Operation Years 40 years
11 Debt Equity Ratio Debt 80：Equity 20
12 Lender Japan International Cooperation Agency (JICA)
13 Repayment 20 years, equal semi-annual installment
14 Interest 3.00% per annum
15 Discount Rate
Opportunity Cost of Capital
10.4%
(Source: prepared by the Study Team)
The result is shown below.
Table 6 Preliminary Financial and Economic Evaluation
Evaluation Index Evaluation
1 Financial Internal Rate of Return (FIRR) 8.11%
2 Economic Internal Rate of Return (EIRR) 15.06%
3 Net Present Value (NPV） US$ 131.78 million
4 Benefit Cost Ratio (B/C) 1.07
(Source: prepared by the Study Team)
S-8
As FIRR of 8.11% is bigger than 7.50~7.75% which are Ukrainian policy interest rates in the recent years, the
project is financially viable as far as the above preconditions are actual and reasonable ones.
EIRR is calculated at 15.06% which is higher than the opportunity cost of capital 10.4%. And NPV and B/C are
calculated at US$131.78 million and 1.07. These figures show that the implementation of the project would be
economically viable.
However, on 24th September 2013 international rating agency, Moody’s Investors Service has dropped Ukrainian
credit rating by one notch from B3 “regarded as speculative and high risk” to Caa1”probability of default rating”
and announced the possibility of another one notch downgrade.
Therefore, if the trend would continue, the opportunity cost of capital should be considered at the higher rate and
EIRR be targeted at more challenging number by both the investors and the lenders. In fact, the Study Team is
informed by DTEK, the owner of the plant, that they expect higher yield for making new investment.
In order to achieve the target, it is imperative to scrutinize EPC and other costs, and to verify the scheme for
improvement in earnings.
S-9
4) Evaluation of Environmental and Social Impacts
a) Analysis of the Current Status of the Environmental and Social Aspect
The project relates to the expansion of the existing power plant. The project site is already developed and is not
rich with flora and fauna.
There is no other large fixed emission source near the power plant site, and the current air quality status is
supposed to be mainly influenced by emission gas from the power plant. The existing units of the power plant is
equipped with scrubber or electrostatic precipitators, but not with desulfurization and denitration equipment.
There is information that the existing units do not meet the emission standards of Ukraine, European Union (EU),
International Finance Corporation (IFC) and the World Bank (WB).
There is no other large fixed discharge source near the power plant site, and water discharge from agricultural
activity in the surrounding area and sewage discharged by the households are supposed to be the main water
pollution source. It was confirmed during the field survey that noise level within the power plant site and near the
boundary of the site is not significantly high.
Dobrotvirska Town in the south of the site has been constructed for labors of the existing power plant and the
infrastructure such as accommodation; hospital and school has been established. The access road to the power
plant is the main road of the town.
b) Environment Improvement Effects by Project Implementation
Sulfur Dioxide (SO2) concentration by impact only from the power plant is currently expected to exceed EU
standards. However, in the case that the exciting Units 5-6 and Units 7-8 are abandoned, impact from the power
plant will largely decrease, and it will meet EU standards.
c) Overview of the Laws and Regulations Concerning Environmental and Social Considerations of the Host
Country and the Measures Needed for Clearing it
In Ukraine, the legal revision of the Environmental Impact Assessment (EIA) is in progress according to the
European legal systems. Paying attention to the trend of these revisions, the EIA for the project needs to be
implemented in the future.
It is essentially important to disclose the information and conduct public consultation from the earliest possible
stage of the project’s EIA according to the laws and regulations of Ukraine and the environmental social
consideration guidelines of JICA and others, and thereby appropriately collecting the local people and
stakeholder’s opinions and reflecting them to the design, construction activity and operation of the project.
d) Requirement for the Host Country (Project Proponent and Other Related Organizations) for the Implementation
of the Project
S-10
The project proponent should develop the EIA report according to the laws and regulations of Ukraine based on
the result of the survey and prediction listed below, including the adequate consideration of
stopping/decommission of the existing units, efficiency of the fuel gas treatment system, water use, thermal
effluent discharge, taking special attention on the cumulative impact, in order to improve or not to deteriorate the
present status.
・ Air quality: assessment of the current pollution level
・ Water quality: assessment of the current water temperature of the reservoir in relation to the thermal
effluent discharge
・ Noise: assessment of noise level in the surrounding residential area
S-11
(4) Planned Project Schedule
Our assuming overall project schedule is shown in the diagram below.
Figure 1 Project Schedule
2014 2015 2016 2017 2018 2019 2020 2021
Feasibility Study
Environmental Social
Impact Assessment (ESIA)
Contracts’ Negotiations
Permits and Licenses
Finance Close
Site Preparation
Procurement and
Transportation
Civil & Installation
Commissioning
Commercial Operation
(Source: prepared by the Study Team)
S-12
(5) Feasibility of the Project Implementation
In February 2010, ITOCHU Corporation together with Tokyo Electric Power Services Co., Ltd. made a
preliminary study on Power Sector and Thermal Power Plants (TPPs) in Ukraine, taking the following points into
consideration;
・ There were many coal-fired TPPs in Ukraine whose commercial operations had started since 40-50 years ago,
・ The installed capacity had decreased since the independence from Soviet Union, and
・ Ukraine has committed herself in the agreement on the cooperation in the energy field with European Union
(EU) to promote the efficiency and safety of TPPs, and meet EU standard in environmental aspects.
During the study, three (3) coal-fired TPPs including Dobrtvirska TPP (Dob TPP) were visited and Dob TPP was
selected to follow with the following reasons;
・ The others used anthracite coal and only Dob TPP combusted bituminous coal which USC technology can be
applied to, and
・ It is near from Polish border and there is transmission line between two countries and the electricity generated
by the plant could be exported to Poland.
Green Investment Scheme (GIS) agreed in 2009 between Japan and Ukraine or Yen Loan would be utilized for the
project implementation in the beginning stage. However since
・ There is no surplus in GIS, and
・ The company that owns Dob TPP has been privatized and Yen Loan is not applicable,
the project would be implemented in the form of joint venture with Ukrainian partner.
The outline of preliminary financial and economic evaluation is shown in the above (3) 3). JICA’s overseas loan
makes the project implementation more bankable; however Ukrainian current situation is taken into consideration,
the yield level should be improved more by scrutinizing EPC and other costs narrowly.
Power Purchase Agreement (PPA) which secures debt repayments is required for the project finance. It is also
necessary to check how to establish such the scheme.
S-13
(6) Advance on the Technical Aspect of Japanese Companies
Japanese manufactures and utility companies have the advantage to those in other countries in especially USC
technologies.
Through the long experience of implementing USC TPPs under the highest environmental requirements in Japan,
Japanese companies have been maintaining high standard at the world state-of-the-art level. As the result,
Japanese manufacturers have enjoyed a lot of delivery records and kept competitiveness against European
manufactures. Some of Japanese manufactures give licenses of USC technology to foreign manufactures and
receive orders even from European countries.
It is necessary to meet the more strict environmental standards required by the local government in Japan rather
than USA or Europe, which advances Japanese technological level in the highest one.
Not only plant performance, but also O&M technology in USC such as advanced automation operation, high
availability factor and etc. is in the level of the world state-of-the-art. Japanese companies have established O&M
support system, responding carefully to the needs of the owners.
Also Japanese manufacturers have advanced software technology so that Japanese manufacturers can propose
competitive infrastructural systems.
The Japanese manufacturers have a competitive edge in the field of less environmental impact and energy
conservation. In particular, they can accommodate advanced requirements from the foreign clients against the
background of the technical capabilities that they have corresponded O&M issues to domestic power company.
S-14
(7) Map of the Project Area in the Country
Figure 2 Map of the Project Area in the Country
(Source: prepared by the Study Team based on Google Map)
Chapter 1 Overview of the Host Country and Sector
1-1
(1) Economic and Fiscal Situation in Ukraine
1) General Information
a) Geography and Climate
a)-1 Geography
Ukraine is located in Eastern Europe, bordering Russia to the east and northeast, Poland, Slovakia, Hungary,
Romania and Moldova to the west, the Black Sea to the south and Belarus to the north, extending approximately
1,400 km from east to west (24~40 degrees east longitude) and 900 km from north to south (44~52 degrees north
latitude) with a total land area of 603,700 km2, which is the 2nd largest following Russia in Europe and about 1.6
times larger than Japan.
Figure 1-1 Location of Ukraine
(Source: Google Map)
The Ukrainian landscape consists mostly of fertile plains (steppes) and plateaus. Ukraine also has a number of
highland regions such as Polesye marshy areas in the north, Donetsk Hills in the east and Carpathian Mountains in
the west.
Being covered by fertile black soil “chernozem”, the plain fields from the central to the southern parts are utilized
for cultivated areas such as wheat and have been called as “European Breadbasket” since Russian Czarism era.
1-2
The climate of Crimean Peninsula is Mediterranean climate. Yalta, where the Yalta Conference was held in the
end stage of World War II (February 4th to 11th, 1945), is located in the peninsula and famous for one of
Mediterranean resorts.
The Dnieper is the 3rd longest river (after the Volga and the Danube) and used for the core stuff of water transport
as well as drinking water and hydraulic power plants.
a)-2 Climate
Ukraine is situated between latitudes 44º and 52º north and longitude 24º and 40º east. The northern and western
regions belong in subarctic humid continental climate zone and are the area of high rainfall. The climate of
south-eastern region is dry steppe climate and that of Crimean Peninsula is temperate Mediterranean climate.
The southern region sometimes faces water shortage and suffers from water supply restriction. Carpathian region
has the heaviest rainfall through the year with the average number of 1,200~1,600 millimeter (mm). The eastern
region has the least rainfall and the average number is 300mm.
The figure 1-2 shows monthly average highest and lowest temperatures in Lviv, that is the nearest major city from
the project site, and the figure 1-3 shows those of rainfall. The average annual temperature in Lviv is 7.1 degree
Celsius (ºC), the average of monthly highest temperature is 10.5 ºC and that of monthly lowest temperature is 3.7
ºC. The annual amount of rainfall in Lviv is 600mm.
Figure 1-2 Average Temperature
(Source: ZenTech Home Page)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Ave.Highest Temp in Lviv -1.0 0.0 5.0 11.0 17.0 20.0 21.0 21.0 17.0 11.0 4.0 0.0
Ave.Highest Temp in Tokyo 9.8 10.0 12.9 18.4 22.7 25.2 29.0 30.8 26.8 21.6 16.7 12.3
Ave.Lowest Temp in Lviv -5.0 -5.0 -1.0 3.0 8.0 11.0 12.0 12.0 8.0 4.0 0.0 -3.0
Ave.Lowest Temp in Tokyo 2.1 2.4 5.1 10.5 15.1 18.9 22.5 24.2 20.7 15.0 9.5 4.6
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0Ave.Highest Temp in LvivAve.Highest Temp in TokyoAve.Lowest Temp in LvivAve.Lowest Temp in Tokyo
℃
1-3
Figure 1-3 Amount of Rainfall
(Source: ZenTech Home Page)
b) Brief History of Ukraine
Ukraine was first populated by nomadic tribes such as the Cimmerians, Scythians, and the Goths. Both Greece
and Rome established cities in Ukraine at the peak of their empires.
In the 10th century, the Kievan Rus emerged as a growing city-state based out of the city of Kiev, and in the 11th
century the Kieven Rus was the largest empire in Europe. With the rule of Vladimir the Great in 980, the Kievan
Rus became a Christian empire and reached its peak under the rule of his son, Yaroslav the Wise. In the 12th
century the empire began to decline and in the 13th century Mongol raiders destroyed the city of Kiev.
In later years, the Ukraine became part of other countries, first Poland and later Russia. The Ukrainians made
efforts to keep their culture alive despite limits imposed on them by Russia. Russia even banned the use and study
of the Ukrainian language. When the Soviet Union took over, things became even worse. Joseph Stalin created an
artificial famine to maintain control of the area which killed millions of people. World War II did not make things
better for the Ukraine. It is estimated that the German Nazi's killed 1 million Ukrainian Judaism people.
Yet another disaster struck the Ukraine in 1986 when the Chernobyl nuclear power plant exploded. The Soviet
Union tried to hide the disaster and refused international help. Finally, the Soviet Union collapsed and Ukraine
became an independent country in 1991.
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Rainfall in Lviv 30.0 30.0 30.0 40.0 60.0 80.0 90.0 70.0 50.0 40.0 40.0 40.0
Rainfall in Tokyo 48.6 60.2 114.5 130.3 128.0 164.9 161.5 155.1 208.5 163.1 92.5 39.6
0.0
50.0
100.0
150.0
200.0
250.0Amountmm
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c) Domestic Affaires
Proclaiming sovereign power on 16th July 1990, Ukraine has declared her independence on 24th August 1991and
changed her name as “Ukraine”.
The Constitution of Ukraine, which was created and promulgated on 28th June 1996 by the parliament, stipulates
that Ukraine is a republic under mixed semi-parliamentary semi-presidential systems with separate legislative
(unicameral parliament, 450 seats, 5-years term, Chairman: Volodymyr Lytvyn), executive (Cabinet of Ministers),
and judicial (courts) branches.
The President of Ukraine (5-year term) is the head of state and guarantees that state sovereignty, territorial
integrity, conformity of the Constitution, and, citizen’s right and freedom. The current President is H.E. Mr. Victor
Yanukovych whose second round has started since 25th February 2010.
The Constitution of Ukraine stipulates that the voting right is given those whose ages are 18 or over and the
minimum eligible age for both the President and members of the parliament is 25. The members of the parliament
are elected by a system of proportional representation, and the President is elected by public referendum.
Ukraine consists of 27 administrative districts, that is one autonomous republic (Crimean), twenty-four provinces
and the cities of Kiev, the capital, and Sevastopol, both having a special legal status.
Figure 1-4 Administrative Districts
(Source: edited by the Study Team based on the data in Wikipedia)
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d）Foreign Relations
d)-1 Foreign Diplomacy
Ukraine has established diplomatic relations with one hundred and eighty countries, and opened eighty-three
embassies and eight representative offices within the international organizations in the world. And there are
seventy-two embassies established by the foreign countries in Ukraine (as of April 2012).
Under the former President H.E. Mr. Yushchenko, the relation with Russia soured, because of those disputes such
as supply of natural gas, staying of Russian Black Sea Fleet, accession to North Atlantic Treaty Organization
(NATO), historical recognition, languages, and religious affiliation.
The current President H.E. Mr. Victor Yanukovych makes effort to mend relations with Russia whilst keeping the
policy to become a member of European Union (EU). There is some progress by compromising time frame of
staying of Russian Black Sea Fleet; however the negotiation on natural gas price is extended for a long period of
time.
Ukraine has declared her non-alignment by means of the domestic law since July 2010.
The process of criminal prosecuting against the former Prime Minister H.E. Mrs. Tymochenko and other
politicians belonging to opposition political parties makes the relation with European Union worse.
d)-2 National Defenses
Ukraine maintains conscription system and holds the largest military power among New Independent States (NIS),
having about 150,000 military personnel under arm and 50,000 civilian staff, then in total army 200,000 strong.
Keeping alliance with NATO, Ukraine will not become a member of it.
Ukraine has finally reached the agreement with Russia on Black Sea Fleet being split up at the end of May 1997.
Ukraine allowed Russian in April 2010 to extend the stay of her Black Sea Fleet until 2042 (the original time
frame was 2017) as a bargaining point for receiving a discount of natural gas price.
e) Social Circumstances
e)-1 Population
The population of Ukraine was 45.57 million and that of Capital City, Kiev was 2.82 million in May 2012.
Figure 1-5 shows the demographic changes in Ukraine for the period of 1980-2010. Ukraine is facing a declining
population, basically because of extreme decrease of childbirth and sharp increase of passing away. Besides
merely the population is decreasing, childbearing, mortality, natural change (social changes such as immigrant and
relocation are not included), easy-generated birth rate (the total number of live births of a year divided by the
population at the middle of the year), basic death rate (the total number of death of a year divided by the
population at the middle of the year), and fertility rate (the total number of live births of a year divided by the
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female population with childbearing age (from fifteen to forty-five) at the middle of the year), are sharply
worsening, after a few years since the Chernobyl disaster occurred in April 1986.
Figure 1-5 Demographic Changes in Ukraine
(Source: The World Bank Homepage Indicators by Countries)
e)-2 Languages
There stipulate in the Constitution that the official language in Ukraine is Ukrainian, which is one of east Slavic
languages, and family with Russian and Belarusian languages. Being compared with Russian, Ukrainian keeps old
Slavic grammar and has a lot of words whose meanings are same as Polish.
Since the official language was Russian in the Soviet era, Ukrainian can speak both the languages and often mix
them.
e)-3 Peoples
Ukrainian is the largest and accounts for 77.8%. The others are Russian (17.3%), Belarusian (0.6%), Moldavian
(0.5%), Bulgarian (0.4%), Crimean Tatar (0.5%), Hungarian (0.3%), Rumanian (0.3%), Polish (0.3%), Jewish
(0.2%), Armenian (0.2%) Greek(0.2%), Tatar (0.2%）.
e)-4 Religions
Most of Ukrainian citizens keep Christiane identities, however most of them do not belong to specific religious
organization. The traditional religion is Ukrainian Orthodox Church-Kyiv Patriarchate, which is one of Orthodox
Churches. There are believers of the Ukrainian Greek Catholic Church, Jewish, Muslim (Sunni), Catholic and etc.
e)-5 Currencies
The national currency of Ukraine is the hryvnia whose code is UAH. The hryvnia is subdivided into 100 kopiyok.
United States dollar (US$) 1 is UAH 8.285 with the exchange rate of 18 December 2013.
42,000
43,000
44,000
45,000
46,000
47,000
48,000
49,000
50,000
51,000
52,000
53,000
1980 1985 1990 1995 2000 2005 2010
x1,000
1-7
e)-6 Main Public Holidays
January 1st New Year Holiday
January 7th Orthodox Christmas
March 8th International Women’s Day
April Easter (moveable feast)
May 1st&2nd Mayday
May 9th Victory Day against Germany
June Holy Trinity (moveable feast)
June 28th Constitution Memorial Day
August 24th Independence Day
2) Economic and Fiscal Conditions
a) Economic Overview
The World Bank reports that the nominal Gross Domestic Production (GDP) of Ukraine in 2012 was US$ 176.3
billion which is just less than the economic magnitude of Fukuoka prefecture in Japan. GDP per capita in 2012
was US$ 3,867 and less than 50% of the world average.
In Soviet times, the economy of Ukraine was the second largest (now the third after Russia and Kazakhstan)
among the Commonwealth of Independent States (CIS). With the planned and specialized economy in the union,
Ukraine took the central role in iron and steel, shipbuilding, military industry such as aerospace, and cereal
production. The figure 1-6 shows nominal GDPs of major CIS countries in 2012.
Figure 1-6 Nominal GDP’s of major CIS countries in 2012
(Source: The World Bank Data Table)
2,014,775
201,680
176,309
67,198
51,113
33,679
0 500,000 1,000,000 1,500,000 2,000,000 2,500,000
Russia
Kazakhstan
Ukraine
Azerbaijan
Uzbekistan
Turkmenistan Unit: million US$
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The stock of those industries has been contributing on economic growth of Ukraine since the dissolution of the
Soviet system. Especially, iron and steel industry exports huge amounts and takes important role.
Ukraine is covered by fertile black soil “chernozem” and called as “European Bread Basket”. Agriculture is one of
important industries too.
On the other hand, depending almost all of her energy resources such as natural gas on import from Russia and
delaying structural reforms, Ukraine is easily affected by the neighboring countries.
b) Brief Economic History
In 1991, the government liberalized almost all prices of goods and developed legal systems for the privatization of
the state-own companies. However, political reforms were suspended due to push-back from both the cabinet and
the parliament and most of state-own companies were excluded from the privatization process.
The loose monetary policies of the early 1990s pushed inflation to hyperinflationary levels. For the year 1993,
Ukraine holds the world record for inflation in one calendar year.
The President Leonid Kuchma, who took up the post in 1994, promoted political reforms with the support from
the International Monetary Fund (IMF). In August 1996, the currency was redenominated at a rate of 1 new unit =
100,000 old unit and the new currency, the hryvnia was introduced.
In 1999, the GDP had fallen to about 40% of the 1991 level, however Ukraine enjoyed trade surplus for the first
time in the same year. Thereafter the growth rate of GDP and the growth rate of industrial production in 2000
were 6% and 12.9% respectively, thanks to increase in export of heavy industries, such as iron and steel, being
supported by depreciation of hryvnia. These were the first economic growth after independence. The economic
growth had continued for the years of 2001-2004 thanks to sharp increase in export of iron and steel to China.
However, the economy of Ukraine took a bad turn after the President Yushchenko came to power. Until then, the
economic growth of Ukraine was backed up by cheaper energy resources and materials supplied from Russia, and
export to the emerging market such as Russia and China.
The President Yushchenko kept the distance from Russia and expressed his will to strengthen relationship with EU
and United States of America (USA). He expected increase in foreign investment from USA and Western
countries, which however did not increase as expected in fact. Ukraine could not receive cheaper energy resources
from Russia, reduced the export value to China due to her domestic demand declining, and suffered from
economic deterioration.
Ukraine was hit by the economic crisis of 2008 and about limping toward default. Under such circumstances, the
government requested monetary support to IMF and IMF approved a stand-by loan of about US$ 16.4 billion in
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November 2008. In July 2010, IMF again approved a new stand-by loan of about us$ 15 billion and the
government has started structural reforms of taxation system, pension system, gas supply system, price up of
utility charges and etc.
The Figure 1-7 shows the transition of nominal GDP and growth rate of real GDP in Ukraine for the period of
2003-2012, and major economic indices are shown in the Table 1-1.
Figure 1-7 Transition of nominal GDP and Growth Rate of real GDP in Ukraine
(Source: National Statistic Bureau)
Table 1-1 Key Macroeconomic Indicators
(Source: Statistic Bureau and Ministry of finance in Ukraine)
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Nominal GDP 50.1 64.9 86.1 107.8 142.7 180.4 113.5 137.7 164.9 176.3
Actual GDP Growth rate 9.6% 12.1% 2.7% 7.3% 7.9% 2.3% -14.8% 4.2% 5.2% 0.2%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
0
50
100
150
200
US$ billion
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Nominal GDP (US$ billion) 50.1 64.9 86.1 107.8 142.7 180.4 113.5 137.7 164.9 176.3
Nominal GDP per Capita (US$) 1,049 1,367 1,829 2,303 3,069 3,891 2,545 2,974 3,576 3,867
Growth Rate of Real GDP 9.6% 12.1% 2.7% 7.3% 7.9% 2.3% -14.8% 4.2% 5.2% 0.2%
Jobless Rate 9.1% 8.6% 7.2% 6.8% 6.4% 6.4% 8.8% 8.1% 7.9% 8.1%
Consumer Price Increase Rate 5.2% 9.0% 13.5% 9.1% 13.6% 9.0% -12.2% 6.4% 11.1% 9.6%
Average Wage Increase Rate 12.1% 10.8% 6.9% 5.4% 7.1% 1.9% 5.5% 17.7% 17.5% 19.7%
Trade Balance (US$ million) 462 -1,937 -8,152 -14,350 -5,733 -9,309 -14,197 -15,900
Export Value (US$ million) 23,080 33,432 34,287 38,368 49,248 67,003 39,703 51,431 68,410 68,800
of which to Japan (US$ million) 110.1 133.1 141.6 173.2 156.6 216.0 212.3 201.1 169.9 484.7
Import Value (US$ million) 23,021 29,691 36,141 45,035 60,670 85,534 45,436 60,740 82,607 84,700
of which from Japan (US$ million) 147.1 256.7 385.4 675.7 1,081.7 1,991.1 388.3 456.0 665.6 572.4
Current Account (US$ million) 2,890 6,910 2,530 -1,620 -5,270 -12,760 -1,732 -3,018 -10,250 -14,410
Capital Account (US$ million) -3,922 11,478 6,551Foreign Direct Investment (US$million)
1,424 1,715 7,808 5,604 9,891 10,913 4,816 5,759 7,015 7,090Foreign Currency Reserves (US$million)
6,937 9,524 19,394 22,256 32,462 31,543 26,505 34,576 31,795 24,600
Foreign Debt balance (US$ million) 23.8 30.6 39.6 54.5 80 101.7 103,396 117,346 126,236 137,000
Policy interest rate 7.25% 7.33% 9.00% 9.50% 8.25% 10.00% 10.25% 7.75% 7.75% 7.5%Exchange Rate (UAH/US$) on yearend
5.35 5.313 5.376 5.123 5.052 5.057 8.044 7.948 7.986 7.99
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c) Issues related to Supply of Natural Gas and Crude Oil from Russia
Ukraine has limited natural resources and depends more than 70% of her demand of natural gas and crude oil on
import from Russia. In 2010, Ukraine imported about 36.5 billion cubic meter of natural gas, about 36.4 billion
cubic meter of which were transited to European countries. Russia exports about 80% of natural gas to European
countries via Ukraine.
After the President Yushchenko came to power in 2005, Russia proposed natural gas price hike in three times.
Since Ukraine rejected it, Russia proposed further price hike and could not reach an agreement by the end of the
year.
On 1st January 2006, Russian semi-sate-own company, Gazprom sopped the supply of natural gas to Ukraine, and
as the result EU suffered from lack of natural gas.
On 1st January 2009, Russia reduced supply of natural gas extremely. Ukraine continued to supply of natural gas
to EU by tapping a reserve for her domestic demand. However on 7th January Russia stopped the supply of natural
gas completely, complaining Ukraine’s extraction, which Ukraine flatly denied.
The President Yanukovych had committed himself to negotiate gas price with Russia since the inauguration and in
April 2010 succeeded in 30% price down or price reduction of US$ 100 per 1,000 cubic meters, compromising on
extension of the stay of Russian Black Sea Fleet in Ukraine for another 25 years.
Ukraine is nicely located. There are well facilitated pipe lines for crude oil and natural gas. Ukraine takes great
role in transporting energy produced in Russia and central Asian countries to EU and therefor is deeply involved
in EU’s energy security. Leveraging those circumstances, Ukraine aims to become a member of EU.
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Figure 1-8 Natural Gas Pipelines Map
(Source: Japan Oil, Gas and Metals National Corporation (JOGMEC) Website,
http://oilgas-info.jogmec.go.jp/report_pdf.pl?pdf=0901_B04_motomura_RussiaUkraine.pdf&id=2227）
d) The Relation with IMF
Taking an enormous amount of debt into consideration, the relation with the international financial institutions is
very important for Ukraine. The government takes economic policy respecting those conditions required by IMF.
In September 1998, IMF decided to allocate Special Drawing Rights (SDR) 1,920 million (about US$ 2.5
billion) ) the Extended Fund Facility (EEF) to Ukraine. However, since Ukraine delayed
・ implementing 2002’s national budget,
・ solving debt issue related to Value Added Tax (VAT),
・ the reforms of fuel and energy sector,
・ the completion of privatizing regional electricity distribution companies and etc.,
which were IMF’s conditions for the allocation of EEF, in September 2002, the program terminated, 38% of EEF
(about US$ 966 million) not being disbursed.
In March 2004, recognizing Ukraine’s sound economic management, IMF allocated another SDR 411.6 million
(about US$ 600 million) EFF with the available period of one year. However Ukraine did not use the program.
In October 2008, the international financial crisis hit Ukrainian economy and her international balance of
payments worsened rapidly. To assist Ukrainian economy, IMF decided to allocate SDR 11 billion (about
Ukraine
Kiev
Underground Storage Facilities
Romania
Belarus
Poland
Moldova
Hungary
Slovakia
Black Sea
Sea of Azov
Sevastopol
Uzhgorod
SumyScheduled Station Pizalevka
Scheduled Station
Valuik Scheduled Station
1-12
US$ 16.4 billion) standby loan which could be disbursed within two years. IMF ordered the government as quick
as possible to rebuild financial sector including the exchange policy be established by the central bank. Until
November 2009, about US$ 10.6 billion had been disbursed in three tranches, however facing the political turmoil
caused by presidential election, another disbursement was not made.
After the President Yanukovych was elected, in July 2010 another standby loan agreement with the amount of
about US$ 15 billion was made and two disbursements were made by March 2011. Although Ukraine expects 3rd
disbursement, IMF does not accept it since Ukraine does not meet IMF’s requirements such as price hike of
natural gas for household use. To make matters worse, in 2012 and thereafter Ukraine should make numerous debt
repayments and without IMF’s 3rd disbursement Ukraine would be pushed into serious economic situation.
e) External Debt Problems
According to the announcement made by the Ministry of Finance of Ukraine, as of 1st January 2001 the total
amount of her external debt was US$ 10.3 billion. In July 2001, the Paris Club of government creditors agreed to
the rescheduling of Ukrainian about US$ 580 million debt and the repayment being made for 12 years including
the grace period of three years. The agreement officially entered into force in November 2001.
Japanese government agreed with Ukrainian government to the rescheduling of Japanese Yen 6.6 billion which
was a part of the debt in the total amount of about US$ 200 million lent by the former Export Import Bank of
Japan in October 2002.
Ukrainian and Russian governments agreed to reschedule Ukrainian about US$ 1.4 billion debt for importing
natural gas in October 2001 with the following conditions.
・ Repayment Period: 12 years (including grace period of 3 years)
・ Interest Rate: London Inter-Bank Offered Rate + 1%
・ The deal is private transaction however the payment is guaranteed by the government.
・ Russia would pay natural gas transit fee to Ukraine in cash or kind.
Finally, both of the countries agreed to the method of payment for the debt in August 2004.
Due to hryvnia depreciation caused by the international financial crisis occurring in 2008 made, it is worried if the
repayments in foreign currencies could be made timely.
f) The Trend of Trade and Investment
f)-1 Transition of Trade Volume
The total trade volume had registered declines since 1996 and recorded the lowest figure in 1999. Ukraine
suffered from trade deficits in 1997-1998, however enjoyed trade surplus US$ 131 million in 1999 with export
value of US$11.5 billion (15.4 % decrease from the previous year) and import value of US$ 11.4 billion (37.3%
decrease from the previous year).
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Thanks to depreciated hryvnia and Russia’s economic recovery, Ukraine continuously had exported large number
of iron and steel, and products of light industries and recorded trade surplus since 2000.
On the other hand, because of income level up and influx of foreign capital, import value for consumable products
had become enlarged. Then, in 2005 and the following years Ukraine again registered trade deficits. Year by year
trade deficit became larger and reached US$ 18.5 billion in 2008.
Trade deficit in 2009 scaled down to US$ 5,733 million due to the international financial crisis and depreciated
hryvnia. As to trade volume, both the export and import figures in 2009 dropped down extremely.
In 2010, although the trade volume recovered, the trade deficit increased again. In 2011, both the export and
import values increased largely, however the import figure expanded larger than the export figure and trade deficit
continued.
Figure 1-9Transition of Trade Volume
(Source: Statistic Bureau in Ukraine)
f)-2 Trade Structure Aspects
Ukraine imports natural gas and crude oil, and exports steel mill products, mineral manufactures, machineries,
chemical products, agricultural commodities, and etc. Ukraine is famous for the transit country of natural gas from
Russia to European countries.
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I. Major Export Products (Source: National Statistic Report 2011)
・ Steel mill products (32.3% of the total）
・ Mineral manufactures (12.6%)
・ Machineries and equipment (9%)
・ Agricultural commodities (6.3%)
II. Major Import Products (Source: National Statistic Report 2011)
・ Mineral manufactures (36.4% of the total）
・ Machineries and equipment (15.5%)
・ Chemical products (9.7%)
・ Automobiles and vehicles (7.5%)
f)-3 Major Trade Partners (Source: National Statistic Report 2011)
I. Export: 1st Russia (29.0%), 2nd Turkey (5.5%), 3rd Italy (4.4%), 4th Poland (4.1%)
II. Import: 1st Russia (35.3%), 2nd Germany (8.3％), 3rd China (7.6％), 4th Belarus (5.1%)
f)-4 Trade with Japan
The trade volume between Ukraine and Japan sharply increased in the previous years and the total figure in 2008
exceeded US$ 3 billion. According to the National Statics Bureau, Japan exported US$ 2,795.8 million of values
to Ukraine in 2008, which was about double on year-on-year basis, whilst Ukraine exported US$ 115.7 million of
values to Japan, which was almost same figure in 2007. The mainly article of export from Japan was automobile
which accounts for 83% of the total value in 2008.
The volume fell down a lot in 2009 by the reasons of the international financial crisis, introduction of an
additional 13% customs, decrease of access numbers to personal loans and etc.
With regard to the agricultural sector, Japan for the first time imported crop with the value of US$ 6.3 million
from Ukraine in 2002. In the following years, small quantity of fruit and alcoholic beverages had been imported.
In 2009, crop became one of the main imported articles.
The export figure of automobiles from Japan still occupied for 66% and Ukrainian top export article was iron,
steel and slag in 2011 which accounted for 31% of the total value.
The followings are Ukrainian export and import articles respectively to and from Japan.
(Source: National Statistic Bureau)
I. Export to Japan (figures in 2011)
i) Iron, Steel and slag US$ 47.5 million (31%)
ii) Crops US$ 30.7 million (20%)
iii) Non-ferrous Metal US$ 17.8 million (12%)
iv) Raw Materials for iron & steel US$ 16.9 million (11%)
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II. Import from Japan (figures in 2011)
i) Automobiles US$ 673.8 million (66%)
ii) Machineries & Equipment US$ 82.1 million (8%)
iii) Devices & Affairs US$ 47.89 million (5%)
iv) Raw Materials for iron & steel US$ 45.4 million (4%)
f)-5 Trade Topics
Ukraine has officially joined in World Trade Organization (WTO) since 16th May 2008 as the 152nd member.
f)-6 Foreign Direct Investments
Foreign direct investments into Ukraine demonstrate an upward trend. Due to the international financial crisis they
once slowed down, however the balance have reach US$ 50,793.5 million as of 31st March 2012 (cumulative
figure since 1992).
The major foreign direct investors are as follows;
① Cyprus US$ 13,661.9 million (26.9％ of the total)
② Germany US$ 7,468 million (14.7％)
③ Netherland US$4,906.6 million (9.7％)
④ Russia US$ 3,661 million (7.2％)
⑤ Austria US$ 3,446.6 million (6.3％)
⑥ United Kingdom US$2,345 million (4.6％)
⑦ France US$ 2,276.5 million (4.5％)
Russia has increase foreign direct investments toward Ukraine since 1999. Russian and Ukrainian capitals were
influent into Ukraine, flight capitals being transferred from Cyprus and British Virgin Islands,
About US$ 4.8 billion out of foreign direct investments from Germany was used for the acquisition of
Kryvorizhstal Ironworks through privatization program. (Arcelor Mittal grope purchased the asset through the
group company in Germany.)
One of the main investments from Austria is the acquisition of Aval Bank made by Raiffeisen credit cooperatives.
g) The Prime Industries and their Challenges
g)-1 Agriculture Sector
Ukraine is covered by fertile black soil “chernozem”, where wheat, sugar beet, sunflower and etc. are cultivated,
and had been called as “European Breadbasket”.
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Post-Soviet era, those issues are pointed out such as the delay of technological modernization and structural
reforms, and worsened soil conditions due to desolation. However, agricultural products such as wheat, sugar and
sunflower oil are Ukrainian important exports, and majority of those are exported to CIS and European countries.
In 2002, Ukraine exported feed grains to Japan for the first time.
It is necessary to make several reforms for reconstruction of Ukrainian agricultural sector. As part of them, in
October 2001 the “New Land Law”, which would have entered into force in 2005 and enabled Ukrainian people
to buy and sell agricultural lands each other, was established.
However, the concern, that large capitals might acquire huge lands, had made the law not effective. At last, the
parliament is discussing how to enact the law, now.
In 2007, “Agriculture Land Development Program of Ukraine for the period until 2015” was adopted.
The price escalation of agricultural products attracts Western capitals and state-dominated funds moneys in
middle-east countries toward investments in agricultural businesses. The agriculture sector in Ukraine occupies
important place in her economy in the view points of land trade, bio-energy and international food supply depot.
Although the international financial crisis occurring in 2008 hit Ukrainian economy, GDP of agriculture sector in
Ukraine recorded positive growth in 2009.
On the other hand, many issues, such as agricultural land reforms, restructuring for increase in productivity,
developing logistic and storage infrastructures, remain unsolved.
The bad weather in 2010 damaged crop yields and in October 2010, the government of Ukraine had introduced
quota controls for export of cereal until the end of the year. In December 2010, the period was extended until the
end of March 2011 and again done until the end of June 2011 in March 2011.
As of 30th June 2011, the quota controls was lifted, however the government had introduced a special tax for
export of wheat, barley and corn which was effective until the end of 2011.
g)-2 Heavy Industry
Heavy and chemical industry including steel industry is one of important sectors in Ukraine. The volume of crude
steel production in 2010 was ranked 8th in the world and steel mill products occupy more than 30% of export
value.
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Steel industry have started in Donbass region located in the eastern part of Ukraine since Russian czarism era,
utilizing coal procured from Donets coal mine and iron ore from Kryvyi Rih iron mine. Donbass is famous for
“the city of steel industry”, and the open-cut mining, Kryvyi Rih iron mine is famous for the biggest iron mine in
the world.
Further industrialization was promoted in the Soviet era and army complex with higher technology had been
established. Paton Electric Welding Institute in Kiev keeps the highest level in welding technology. Shipbuilding
industry is active in the Black Sea coast area, where many of aircraft careers including Minsk and submarines
were built in the Soviet era.
Also Ukraine keeps the highest level in aerospace industry. The world’s biggest transport aircraft “Mriya” is
manufactured by Antonovov. The Dnieper Rocket, which wss set off in Japan, is manufactured too.
g)-3．Privatization driven by Foreign Capitals
The government announced that Ukraine would have access to foreign money in privatization of the state-own
companies such as power, telecommunication and agricultural infrastructure bodies. In 2001, six “oblenergo”s,
which are distribution companies in each province, and the aluminum smelting plant located in Mykolayiv were
privatized.
However, under Prime Minister Mrs. Tymochenko, who served 1st since February 2005, those privatizations were
re-started all over from scratch, since the privatizations such as Kryvorizhstal Ironworks had been done under
unfair process.
In recent years, although the government still struggles to privatize state-own companies including Ukrtelekom,
the progress does not go well.
g)-4. Coal Industry
Ukraine’s proven coal reserves amount 34.0 billion tons, which is 3.3% - 3.9% of global reserves and 10.0% of
European reserves. The coal reserves of operating mines total 6.1 billion tons, of which 3.5 billion tons is thermal
coal and 2.6 billion tons is coking coal.
The main deposits are located in the Donetsk, Lviv-Volyn and Dnipro coal basins, as well as in the Dnipro-Donets
and Zakarpattia coal depressions. The deposits are in widely extended thin (0.8 - 1.0 m) formation.
As shown in Table 1-2, Ukraine is 2nd biggest coal producer after Poland in Europe.
1-18
Table 1-2 Largest Producers of Hard Coal in Europe
Unit: million tons
Country 2011 2012 Change
Poland 75.7 78.1 3.7%
Ukraine 62.7 64.7 3.2%
United Kingdom (UK) 18.3 16.8 -9.3%
Germany 13.0 11.6 -10.8%
Czech Republic 11.3 11.4 0.9%
Spain 6.6 6.1 -3.0%
(Source: Euro-Coal Market Report 1/2013)
Today, more than 350 companies are involved in coal, lignite and peat production, including about 250 companies
that produce and process hard coal. There are more than 145 mines in Ukraine, of which 43 mines are privatized.
The number of people employed in the industry declined by 5,500 to 248,000 in 2012. However, the volume of
coal, lignite and peat sales by Ukrainian enterprises grew at an annual rate of 9% to US$ 6.3 billion in 2012. The
share of sales in coal industry grew from 4.1% in 2011 to 4.5%.
Ukraine conducted coal export-import transactions with 58 countries in 2012. She imported 15.3 million tons of
coal for US$ 2.9 billion. The largest coal suppliers to Ukraine were Russia, USA and Kazakhstan. Coal exports
reached 8.7 million tons with the value of US$ 1.2 billion. The biggest lots were supplied to Bulgaria, India,
Turkey and Russia.
Ukraine consumed about 74.3 million tons of coal in 2012, out of which 41.2 million tons were used in the energy
sector and 28.6 million tons were used by the iron and steel industry.
Coal in Ukraine is sold either under direct contracts between coal producers and consumers or through the
wholesale market operated by state-own enterprise Ugol Ukrainy.
About 65% of coal supplied by state-own enterprises is sold under the contract with Ugol Ukrainy. The wholesale
market operator distributes coal products at the fixed prices, which results in cross-subsidization of loss-making
mines at the expense of profitable ones. Private companies set the prices for their products based on supply and
1-19
demand in Ukraine, taking the general trends on international markets into account.
The government of Ukraine controls coal prices. The wholesale price of coal per ton dropped to US$ 69.30 in
2012. While at the same time, the production cost was US$ 120.50. The government allocated US$ 1.3 billion
from the national budget to bridge the gap
3) Economic Assistance
Ukraine promotes economic reform and improvement of her economic position in the world as a top priority, and
works through structural reforms in order to stabilize her economy, such as infrastructure development, energy
conservation, effective usage of energy, development of agricultural sector, establishment of legal framework for
investment promotion, improvement in social and living standards and etc.
Paying attention to Ukrainian strategy and challenges for development, the government of Japan continues to
support her economic growth especially in the fields, which Japan has technical advantages in and contribute to
Japanese companies’ activities in Ukraine.
Japanese Government had given the following Official Development Assistance (ODA) supports to Ukraine till
the fiscal year 2010.
・ODA Loan Japanese Yen 19,092 million
Kiev Boryspil State International Airport Development Project
・Grant Aid JPA 2,859 million
Non-Project, Upgrading of medical equipment for children hospital and etc.
・Technical Cooperation.(ODA) JPY 1,237 million
Dispatching/Inviting experts related to Chernobyl disaster, economy, Japan Center and etc.
・Humanitarian Support US$ 8.22 million
Medical equipment/devices, medicines and etc.
・Support for being freed of Nuclear Arms JPY 2,235 million
・Fund for Safety Usage of Nuclear Energy US$ 19 million + euro 3.68 million
・Fund for Chernobyl sarcophagus about US$ 50 million
The major donor countries or organizations to Ukraine are EU Institutions (153.02), USA (140.16), Germany
(89.11), Japan(53.17), The Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM, 32.06),
Sweden(31.43), France(21.54).
(Source: Ministry of Foreign Affairs of Japan ODA Home Page, figures in 2010, Unit: US$ million)
1-20
(2) Overview of the Power Sector
1) Power Sector in Ukraine
Table 1-3 shows the transition of power sector in Ukraine.
Ukraine was independent from the Soviet Union in 1991. In 1992, the electric power and heat supply sector was
shifted to be organized by Ministry of power and electrification in Ukraine that used to be the subordinate
organization of Ministry of electric power in former Soviet Union. Under supervision of the Ministry, a total of
eight regional corporate entities called Joint Power was organized.
Then the government has repeatedly been restructuring power sector organization for electricity business
reconstruction till 2013.
After Orange Revolution in 2005, thermal power plant (TPP) and local distribution company under the umbrella
of state-owned holding company, Energy Company of Ukraine (ECU) were planned to privatize. All the local
distribution companies have already been privatized until now.
Major private energy company DTEK (Donbass Fuel-Energy Company) now owns three thermal generation
companies in five thermal generation companies in Ukraine and account for 65% of annual electricity production
in Ukraine in 2013.
1-21
Table 1-3 Transition of power sector in Ukraine.
Year Politics / Economy Power sector Generation division Electricity Market Transmission line /
distribution division
1975
The construction of a lot of
thermal power plants in 60s
to 75.
(No new thermal power plant
construction up to the current
2013 or later)
1986 Accident at Chernobyl
nuclear power plant
1990
Maximum record of annual amount
of generation (2,985 [TWh]) (Of
which about 2/3 2013 now)
1991 Independent from the
Soviet Union
1992
Ministry of power and electrification
in Ukraine that used to be
subordinate organization of the
Soviet Union has started for
electricity business
1993
For foreign business, including
import and export power, the
state-owned international energy
company, Ukrinterenergo established
Power system separated
from the Russian system
1-22
Year Politics / Economy Power sector Generation division Electricity Market Transmission line /
distribution division
1995
Power sector restructuring based on
the Presidential Decree
The restructuring
state-owned companies, four
thermal and two hydro
power companies
Restructuring the load
dispatch center and
wholesale electricity
market
National Electricity
Regulatory Commission
(NERC) established
Restructuring state-owned
transmission company
Ukrenergo and 27 local
distribution companies
1996
State-owned nuclear power
company Energoatom
established
Wholesale Electricity
Market (WEM)
established
1998
Load dispatch center and
WEM integrated into the
state-owned power
company Ukrenergo
State-owned power
company Ukrenergo
established
1999 Signed in Kyoto Protocol Determine the privatization of the
power sector by Presidential Decree
2000
Ministry of Fuel and Energy
established by the restructuring of
government ministries
State-owned
Energorynok of WEM is
independent from the
Ukrenergo
WEM separated from the
state-owned power company
Ukrenergo
2001
Private power generation
company founded
Skhidenergo
Thermal power generation
Power system restarted
interconnection with Russia
system
1-23
Year Politics / Economy Power sector Generation division Electricity Market Transmission line /
distribution division
sector became 5-company
system
2004
Orange Revolution
Yushchenko regime
started
Withdraw the privatization policy of
the power sector by Presidential
Decree
State-owned holding
company Ukraine energy
company (ECU) founded
State-owned company
Ukrhydroenergo established
by the two companies
merged
2005
Gas dispute with Russia Ministry of coal industry separated
by restructuring of government
ministries
Private power generation
company DTEK founded,
and after, the privatization of
thermal power sector by
DTEK led promotion
2006
The cabinet decision of Ukraine
energy strategy up to 2030
Electricity price increases (Never
revised till the 2013)
Power distribution sector
fully privatized
2008
Member of WTO
To receive emergency
loans from the IMF by
the financial crisis
2009 Emissions trading with
Japan
1-24
Year Politics / Economy Power sector Generation division Electricity Market Transmission line /
distribution division
2010 Yanukovych regime
started
2011
The co-hosts Poland and
the European Football
Championship
(Infrastructure of roads,
airports, etc.)
Member of the European energy
community
2012 Energy strategy revised
2013
Power sector reform bill created to
promote foreign capital
The bill planned to started from 2017
DTEK owns three thermal
generation companies and
account for 65% of total
annual electricity production
Power sector reform bill
created (Power deal
possible without through
Energorynok)
(Source: The Study Team on the basis of the interviews, such as from ECU)
1-25
Figure 1-10 shows power sector organization.
Ministry of Energy and Coal Industry manages electric power business in Ukraine. The ministry has directed the
development of energy policy, the power restructuring and supervision of the energy industry.
In the power sector, nuclear and hydropower sector is still state-owned. All the nuclear power plants are operated
by state-owned Energoatom. Almost all of the hydropower plants are operated by state-owned Ukrhydoenergo.
Privatization of thermal power sector has been in progress.
Figure 1-10 Power Sector Organization
(Source: prepared by the Study Team on the basis of the interview from ECU)
ECU that is under the umbrella of Ministry of Energy and Coal Industry manages thermal power division. There
are five generation companies such as Centrenergo, Donbasenergo, Dniproenergo, Zakhidenergo and Skhidenergo
under ECU. Each thermal power plant of generation companies supplies electric power to consumer via
Wholesale Electricity Market (WEM).
Figure 1-11 shows stock shares in each generation company in Ukraine
Progress of privatization is significant for each company. Three generation companies (Dniproenergo,
Zakhidenergo and Skhidenergo) have been privatized by the capital of DTEK as of now. Two left ones are still
public joint-stock company. As the result of sold of 60.77% shares to the public in August 2013, 75% shares of
Donbasenergo is in the private capital.
1-26
Figure 1-11 Stock Shares in each Generation Company in Ukraine
(Source: Fuel and energy complex of Ukraine / Material from Ministry of Energy and Coal Industry)
1-27
Figure 1-12 shows power supply system.
Figure 1-12 Power Supply System
(Source: prepared by the Study Team on the basis of the interview from ECU)
Each power plant has to sell the generating power to state-owned Energorynok as WEM Operator under the
domestic law. Therefore electric power shall be supplied via WEM so that each counterpart becomes the
participant in WEM.
Based on the single buyer model, WEM exists as single wholesale power market that deals with more than 90% of
the amount of power supply in Ukraine.
Figure 1-13 shows power system in Ukraine
Operation of power system and management of transmission line and substation equipment are operated by
state-owned company Ukrenergo.
1-28
Figure 1-13 Power System in Ukraine
(Source: Map of network / Material from Ukrenergo)
1-29
National Electricity Regulatory Commission (NERC) was established in 1995. NERC is an independent
regulatory agency to monitor the WEM. In addition to that, NERC executes retail license issued for electric
business owner and to regulate transmission fee and retail price by local distribution companies.
Each power plant generates electricity according to the order from load dispatching center and sell the generating
power to Energorynok. NERC regulates the market and sets the electricity and heat supply tariff.
Figure 1-14 shows installed capacity. Installed capacity of thermal power is maximized in the whole.
The total power generation capacity of 2012 is about 53.8 Giga Watt (GW). The breakdown is as following.
Thermal power: 30.6 GW (56.9%), nuclear power: 13.8 GW (25.7%), Hydro power: 5.5 GW (10.2 %), and other
3.9GW (7.2 %). Since gas dispute with Russia, most of the thermal power plant is now using coal as fuel. In
between 2008 to 2012, the total power generation capacity is almost immutable.
Figure 1-14 Installed Capacity [GW]
(Source: Fuel and energy complex of Ukraine / Material from Ministry of Energy and Coal Industry)
1-30
Figure 1-15 shows electric power generation. Amount of electric power generation was reduced due to the impact
of the global financial crisis in 2009. However it is growing steadily thereafter. Electric power generation by
thermal power is next to by nuclear power in the whole.
Annual energy production of 2012 is about 198.1 Tera Watt hour (TWh). The breakdown is as following. Thermal
power: 388.6TWh (44.7%), nuclear power: 90.1TWh (45.5%), Hydro power: 10.8TWh (5.5 %), and other
8.6TWh (4.3 %).
Figure 1-15 Electric Power Generation [TWh]
(Source: Fuel and energy complex of Ukraine / Material from Ministry of Energy and Coal Industry)
1-31
Figure 1-16 shows electric power export.
State-owned international energy company, Ukrinterenergo was founded in 1993 and is in charge of foreign
business including import and export electric power. Ukrinterenergo cooperates with European power grid
operators and conducts electricity exports to neighboring countries.
Ukraine has been gaining the foreign currency income by the electric power export. Amount of electric power
export is 9.7TWh in 2012. It means that Ukraine have exported 4.9% of the total power generated.
Figure 1-16 Electric Power Export [TWh]
(Source: Fuel and energy complex of Ukraine / Material from Ministry of Energy and Coal Industry)
1-32
Figure 1-17 shows electric power export in 2012.
Ukraine power system is referred to as the integrated power system because it connects with other CIS countries
such as Russia, Belarus, Moldova and also Eastern European countries such as Poland, Slovakia, Hungary, and
Romania. Therefore, it is possible to export generating power to neighboring countries.
Power system in Ukraine separated from the Russian system in 1993. After that power system in Ukraine
reconnected from the Russian system in 2001.
2,500 Mega Watt (MW) Power plant capacities around Burshtynska TPP under Zakhidenergo separates from
power system in Ukraine and interconnected with Hungary, Romania and Slovakia. As the result the power system
has been synchronized with t European Network of Transmission System Operators for Electricity (ENTSO-E). In
the future, all the power system in Ukraine is planned to connect to the ENTSO-E system.
Figure 1-17 Electric Power Export in 2012
(Source: Fuel and energy complex of Ukraine / Material from Ministry of Energy and Coal Industry)
1-33
Figure 1-18 shows electric power consumption. Generating power is consumed by industrial, public works, and
home. In recent years, demand for electricity in the home is increasing in particular.
Figure 1-18 Electric Power Consumption [TWh]
(Source: Fuel and energy complex of Ukraine / Material from Ministry of Energy and Coal Industry)
1-34
2）Overview of Thermal Power Generation Sector
Most of the existing thermal power plants started commercial operation in 1960 - 1975.
Main fuel for thermal power generation is coal. Heavy oil or natural gas is used for the auxiliary combustion for
anthracite utilization and emergent operation. The actual output of the majority of thermal power plants is lower
than the output of design specification. This is due to aging, obsolete specification, inefficient maintenance
procedure because of the insufficient financial reasons. It is about time to replace to new construction or major
rehabilitation of any power plants.
The following is the supplier of the main equipment in the existing thermal power plants.
Most of the boiler equipment has been supplied by Taganrog in the former Soviet Union (now in Russia).
Supercritical pressure boiler as steam conditions of 25.5 Mega Pascal (MPa) main steam pressure and 545 0C
main steam temperature is adopted for power plant of rated output to more than 300MW. Most of the turbine
equipment, has been supplied by Electrotajumash manufactured in the former Soviet Union (now in Kharkov,
Ukraine). Most of the generator equipment has been supplied by turbo Atom manufactured in the former Soviet
Union (now in Ukraine).
Figure 1-19 shows installed capacity of each TPP in 2012 and Figure 1-20 shows installed capacity ratio of TPPs
in 2012. Vuglegiska and Zaporizka are the largest capacity of TPP and the each capacity accounts for 13.1% of
TPP in Ukraine.
1-35
Figure 1-19 Installed Capacity [MW] of each TPP in 2012
(Source: Fuel and energy complex of Ukraine / Material from Ministry of Energy and Coal Industry)
Figure 1-20 Installed Capacity Ratio of TPPs in 2012
(Source: Fuel and energy complex of Ukraine / Material from Ministry of Energy and Coal Industry)
1-36
Figure 1-21 shows installed capacity of each thermal generation company in 2012.
DTEK dominates for 62% of the total installed capacity.
Figure 1-21 Installed Capacity [MW] of each Thermal Generation Company in 2012
(Source: Fuel and energy complex of Ukraine / Material from Ministry of Energy and Coal Industry)
Figure 1-22 shows annual electric power generation by each TPP in 2012 and Figure 1-23 shows annual electric
power generation ratio by each TPP in 2012
Burshtynska TPP recorded a maximum annual amount power generation, 9.6TWh (12.2%) in 2012.
1-37
Figure 1-22 Annual Electric Power Generation [GWh] by each TPP in 2012
(Source: Fuel and energy complex of Ukraine / Material from Ministry of Energy and Coal Industry)
Figure 1-23 Annual Electric Power Generation Ratio by each TPP in 2012
(Source: Fuel and energy complex of Ukraine / Material from Ministry of Energy and Coal Industry)
1-38
Figure 1-24 shows annual electric power generation [GWh] by thermal generation company in 2012.
DTEK dominates for 65% of the total electric power generation.
Figure 1-24 Annual Electric Power Generation [GWh] by Thermal Generation Company in 2012
(Source: Fuel and energy complex of Ukraine / Material from Ministry of Energy and Coal Industry)
Figure 1-25 shows capacity factor of TPPs and CHPs and Figure 1-26 shows capacity factor of TPPs in 2011 and
2012. Nuclear power is used for base load role in Ukraine. On the other hand, thermal power generation is used
for load adjustment role. Therefore the capacity factor of the thermal power plant is very low as 33.4% on
average.
1-39
Figure 1-25 Capacity Factor of TPPs and CHPs
(Source: Fuel and energy complex of Ukraine / Material from Ministry of Energy and Coal Industry)
Figure 1-26 Capacity Factor of TPPs in 2011 and 2012
(Source: Fuel and energy complex of Ukraine / Material from Ministry of Energy and Coal Industry)
1-40
(3) Situation in the Target Area
Photo 1-1 shows existing Dobrotvirska power plant overview and Table 1-4 shows outline of existing
Dobrotvirska power plant
Photo 1-1 Existing Dobrotvirska Power Plant Appearance
(Source: taken by the Study team from the existing discharge point)
1-41
Table 1-4 Outline of existing Dobrotvirska Power Plant
Item Contents
Name Dobrotvirska power plant
Owner DTEK Zakhidenergo
Location About 70 km from Lviv city
Capacity 500 MW (100 MW x 2 units and 150 MW x 2 units)
Power plant
1st line
Boiler: TP-10 by Taganrog (Russia), Turbine: LMZ (Russia), Generator:
Electrussia (Russia)
Power plant
2nd line
Boiler: TP-92 by Taganrog (Russia), Turbine: Turboatom (Ukraine), Generator:
ETM (Ukraine)
Power plant
The others
No. 9-11 Units (225MW x 3 units) construction work started in 1988. The
project stopped because of the collapse of the Soviet Union in 1991 and
discontinued.
The turbine building for No. 9-11 Units and the boiler outer frame for Unit No.
9 are left alone and aging.
Fuel
Coal (bituminous)
The coal is transported from Cervonograd coal mine which is located 15km
from the Dobrotvirska power plant (Coal properties is 40% volatile matter and
25% ash)
Commercial
operation Started in 1959
Efficiency 32.49 % in 2007
Current status Operating
(Source: prepared by the Study Team on the basis of the interview from DTEK)
1-42
Figure 1-27 shows the location of existing power plant
Figure 1-27 Location of existing power plant
(Source: prepared by the Study Team on the basis of Google Map)
Figure 1-28 shows power system in western Ukraine.
Existing Dobrotvirska power plant has exported the half of the generating power to Poland by 220 kilo Volt (kV)
transmission line (green colored line). On the other hand, 750kV transmission line (purple colored line) is about
20 km from Dobrotvirska power plant and not utilized because nuclear power plant’s shutdown for long-term.
It is possible to export power to Poland to take advantage of this existing 750kV transmission line for this project.
In that case, it is necessary to construct new 750kV transmission line and substation for the connection between
the power plant and 750kV transmission line.
Lviv city
Dobrotvirska power plant
About 70km
1-43
Figure 1-28 Power System in western Ukraine
(Source: Map of network / Material from Ukrenergo
Dobrotvirska power plant
220kVTransmission Line
750kV Transmission Line
Poland
Ukraine
About 20km
Lviv city
Chapter 2 Study Methodology
2-1
(1) Content of the Study
1) Outline of the Study
This Study was made in order for building, owning and operating 600 MW Ultra-Super Critical (USC) Coal-Fired
Thermal Power Plant (TPP), which is economically efficient, environmentally friendly and Japanese companies
keep technical advantage in, within aging Dobrotvirska TPPs site area in the form of joint venture with Ukrainian
partner. The electricity generated by the new TPP would be exported to Poland.
Figure 2-1 Image of USC Coal-Fired TPP (Kozienice unit No. 11)
(Source: prepared by HITACHI Ltd.)
Contents of this Study are summarized as follows;
① General information including power sector
② The existing facilities (TPP, substation and transmission lines) and present electricity market situation
③ Characteristics of fuel coal and the suppliers
④ Basic design, specification, project schedule and cost estimation
⑤ Environmental and social consideration
⑥ Licenses, permissions and the other necessary process for the implementation of the Project
⑦ Implementing organizations
⑧ Financial and economic evaluation
⑨ Financial source and financing plan
⑩ Technical and other advantages of Japanese companies
2-2
2) Target Fields
The target field of this Study is the area where Dobrotvirska TPPs are located.
Figure 2-2 Transmission Lines Map in Ukraine
(Source: Ministry of Energy and Coal Industry Home Page)
Photo 2-1 Aerial Photo of Dobrotvirska TPPs
(Source: provided by DTEK)
2-3
(2) Method of the Study and Team Members
1) Method of the Study
The Study was made since September 17, 2013 until February 10, 2014. The Study Team collected and reviewed
all the necessary data and information, interviewed those people concerned, and made field investigations. The
Study Team had visited Ukraine and those countries concerned 5 times.
The 1st mission was sent from September 24 to October 6, 2013. They paid visits to both Ukrainian and Japanese
organizations concerned in order to explain the outline of the Study and the schedule, hand over the questionnaires
and request to prepare the answers by the 2nd visit. The field survey of the project site was made too.
The 2nd mission was sent from October 13 to 25, 2013 in order for collecting the answers to the questionnaires
distributed during the 1st visit. The information that could not be received in writing was obtained by means of
interviews with concerned stuff. They again visited the plant site.
The 3rd mission was sent from November 7 to 15, 2013 to exchange views with the international financial
institutions based in Europe with respect to investment and project finance toward coal-fired TPP, political and
other risks in Ukraine and other topics. They also visited PSE-Operator, which is the state-owned grid operator in
Poland, as well as the bodies concerned in Poland so as to obtain general overview of the energy sector in Poland
and the forecast of the electricity volume to be imported from Ukraine.
The 4th mission was sent from December 8 to 14, 2014 to check the current situation of Energy Market Reform
which is expected to be introduced by Polish government. They paid a visit to DTEK and presented the interim
report.
The 5th mission was sent from January 14 to 22, 2014 for making presentations on the draft of the Study to all the
concerned organizations and reflecting their views on the final report.
Reviewing and analyzing all the obtained data and information, the Study Team made up project outline and
schedule, estimated total project cost, made economic and financial analysis, evaluated natural and social
environmental impact, and finalized this report.
In order to obtain the latest technical information related to USC coal-fired TPP, reputable TPP and manufacturer
in Japan were visited.
2-4
2) Team Member and Organization
The Study Team members consist of the employees of ITOCHU Corporation, Tokyo Electric Power Services Co.,
Ltd., HITACHI Ltd. and Japan NUS Co., Ltd. The members are shown in Figure 2-3.
Figure 2-3 Study Team Members
(Source: prepared by the Study Team)
3) Supporting Organization in Ukraine
Dobrotvirska Coal-Fired TPP is owned and operated by privatized Zakhidenergo (West Thermal Power Company),
which is under control of DTEK. The Study Team members were fully supported by DTEK.
Figure 2-4 Supporting Organization of DTEK
(Source: prepared by the Study Team)
Project manager
Y. OZAKI Name Professional Affiliation
Y. OZAKI Power Project Department
K. HINO Kiev Office
S. YAMASHITA Power Project Department
N. YAMATO Power Project Department
S. OHARA Power Project Department
Sergay Trigolov Kiev Office
Olesia Perehrest Kiev Office
Name Professional Affiliation
H. OKANOOverseas Thermal PowerEngineering Department
M. SHOJIOverseas Thermal PowerEngineering Department
T. KAGEOverseas Thermal PowerEngineering Department
ITOCHU Corporation
TOKYO ELECTRIC POWER SERVICES CO., LTD.
OUTSOURCING
in Charge
Project Manager
General OverviewOutline of UkraineEconomic & Financial Analysis
Environmental and SocialConsiderationGeneral Overview and Assistances
Coordination in mission
Coordination in mission
in Charge
Technical OverviewPower Sector, Generation FacilityInstrument and ControlBalance of PlantFeeding SystemsCoal and Ash Handling
Outsourcing Company
HITACHI LTD.
JAPAN NUS CO.,LTD.
Outsourcing Work
Environmental and Social Consideration
Basic Design, Specification, Plant Performance,Cost Estimation, Project Schedule
DTEK
Coal Mining Power generationPower Distribution
and SalesOthers
ZakhidenergoDTEK Trading
(Coal Sales)
DobrotvirskaCoal-Fired TPP
Lviv Design Institute
2-5
(3) Study Schedule
The Study was done since September, 2013 until February, 2014. The overall schedules are shown below.
Figure 2-5 Overall Schedules
2013 2014
Aug. Sept. Oct. Nov. Dec. Jan. Feb.
Works in Abroad
1. The 1st Mission to Ukraine
2. The 2nd Mission to Ukraine
3. The 3rd Mission to Europe
4. The 4th Mission to Poland and Ukraine
5. The 5th Mission to Ukraine
Works in Japan
1. Advance Preparation
2. Technical Consideration
3. Environmental &Social Consideration
4. Financial & Economic Analysis
5. Completion of the Report
Presentation 8/20 JICA
10/30 Interim
12/3 Interim 2/13 Final
Submission of the Report Outline
12/27 Draft
2/10 Final
(Source: prepared by the Study Team)
1) The 1st Mission
The 1st mission was sent from September 24 to October 6, 2013. They visited both Ukrainian and Japanese
organizations concerned in Kiev and Lviv in order to explain the outline of the Study and the schedule. Then, they
handed over the questionnaires and requested to prepare the answers by the 2nd visit. The field survey of the plant
site and the existing TPPs in about 70km north from Lviv was also made.
Photo 2-2 the Meeting with DTEK on September 30
(Source: taken by the Study Team)
2-6
Table 2-1 1st Mission Itinerary
Days Date Day Activity
1 24-Sep Tue ・Trip from Tokyo to Kiev via Frankfurt (Ozaki)
2 25-Sep Wed ・Meeting with ITOCHU Kiev Office
3 26-Sep Thu
・ Trip from Tokyo to Kiev via Frankfurt (Koka of Japan External Trade
Organization (JETRO))
・Data purchased at the Statistic Bureau, the Ministries concerned and Shops
4 27-Sep Fri ・Meeting with the Ministry of Ecology and Natural Resources of Ukraine
・Meeting with European Investment Bank (EIB)
5 28-Sep Sat ・Review of the Data obtained
6 29-sep Sun
・Trip from Tokyo to Kiev via Paris (Shimizu of Hitachi)
・Trip from Dusseldorf to Kiev (Tanaka of Hitachi)
・Review of the Data obtained
7 30-Sep Mon
・Meeting with DTEK
・Meeting with DTEK Trading
・Trip from Kiev to Lviv (Koka, Shimizu, Tanaka, Ozaki, Olesia）
8 1-Oct Tue ・Meeting with West Thermal Power Company
・Meeting with Lviv Design institute
9 2-Oct Wed ・Field Survey at Dobrotvirska Coal-Fired TPP
・Trip from Lviv to Tokyo via Munich (Koka, Tanaka）
10 3-Oct Thu
・Arrive in Tokyo (Koka, Tanaka)
・Maps and Data purchased at the Shops
・Trip from Lviv to Kiev (Shimizu, Ozaki, Olesia)
11 4-Oct Fri ・Meeting with Embassy of Japan
・Lap-up Meeting among the Study Team members
12 5-Oct Sat ・Trip from Kiev to Tokyo via Frankfurt (Ozaki)
・Trip from Kiev to Tokyo via London (Shimizu)
13 6-Oct Sun ・Arrive in Tokyo (Shimizu, Ozaki)
(Source: prepared by the Study Team)
Photo 2-3 the Meeting with West Thermal Power Company on October 1
(Source: taken by the Study Team)
2-7
Photo 2-4 Safety Lecture Photo 2-5 Overview of Dobrotvirska TPP
(Source: taken by DTEK) (Source: taken by the Study Team)
Photo 2-6 Fuel Storage Area Photo 2-7 Electrostatic Precipitator under construction
(Source: taken by DTEK) (Source: taken by DTEK)
Photo 2-8 Water Intake Photo 2-9 Water Reservoir
(Source: taken by the Study Team) (Source: taken by the Study Team)
2-8
2) The 2nd Mission
The 2nd mission was sent from October 13 to 25, 2013. They collected the answers to the questionnaires handed
over during the 1st visit and related information from the bodies concerned. The field survey of the plant site was
made to consider how to allocate the new facilities with the layout drawing of the existing TPPs.
They paid visits to a foreign bank in Kiev, a consulting company in energy sector and the foreign enterprise that is
doing electricity businesses in Ukraine to have their views on electric power business in Ukraine.
Table 2-2 2nd Mission Itinerary
Days Date Day Activity
1 13-Oct Sun ・Trip from Tokyo to Kiev via Munich (Ozaki)
2 14-Oct Mon ・Meeting with ITOCHU Kiev Office
3 15-Oct Tue
・Trip from Tokyo to Kiev via Paris (Shimizu)
・Trip from Tokyo via Munich (Okano, Shoji, Fukazawa)
・Meeting with DTEK
4 16-Oct Wed ・Meeting with Energy Company of Ukraine
・Meeting with IMEPOWER Consulting
5 17-Oct Thu ・Meeting with DTEK
・Trip from Kiev to Lviv (Ozaki, Okano, Shoji, Shimizu, Fukazawa, Olesia）
6 18-Oct Fri
・Meeting with West Thermal Power Company
・Meeting with DTEK in Lviv
・Meeting with Lviv Design institute
7 19-Oct Sat ・Meeting with DTEK/West Thermal Power Company
・Field Survey at Dobrotvirska Coal-Fired TPP
8 20-Oct Sun ・Review of the Data obtained
・Trip from Lviv to Kiev (Ozaki, Okano, Shoji, Shimizu, Fukazawa, Olesia）
9 21-Oct Mon
・Meeting with National Electricity Regulatory Commission
・Lap-up Meeting among the Study Team members
・Trip from Kiev to Tokyo via London (Shimizu)
10 22-Oct Thu
・Arrive in Tokyo (Shimizu)
・Meeting with State-owned Company “ENERGORYNOK”
・Meeting with Embassy of Japan
・Trip from Kiev to Tokyo via Munich (Okano, Shoji, Fukazawa)
11 23-Oct Wed
・Arrive in Tokyo (Okano, Shoji, Fukazawa)
・Meeting with Credit Agricole
・Meeting with Activ Solar
12 24-Oct Thu ・Trip from Kiev to Tokyo via Frankfurt (Ozaki)
13 25-Oct Fri ・Arrive in Tokyo (Ozaki)
(Source: prepared by the Study Team)
2-9
Photo 2-10 Overview of Dbrotvirska TPP from the extension area
(Source: taken by the Study Team)
Photo 2-11 Meeting with Lviv Design Institute Photo 2-12 Meeting with DTEK/West Power Company
(Source: taken by the Study Team) (Source: taken by the Study Team)
2-10
Photo 2-13 Ash Disposal Area (total area 144 Hectare (ha))
(Source: taken by the Study Team)
Photo 2-14 Drain Photo 2-15 Meeting with ECU
(Source: taken by the Study Team) (Source: taken by the Study Team)
Photo 2-16 Meeting with NERC Photo 2-17 Meeting with ENERGORYNOK
(Source: taken by the Study Team) (Source: taken by the Study Team)
2-11
3) The 3rd Mission
The 3rd mission was sent from November 7 to 15, 2013 so as to exchange views with the international financial
institutions based in Europe with respect to
a) investment and project finance toward coal-fired TPP
b) political and other risks in Ukraine, and
c) other topics.
They also visited PSE-Operator, which is the state-owned grid operator in Poland, as well as the bodies concerned
in order to obtain general overview of the energy sector in Poland and the forecast of the electricity volume to be
imported from Ukraine.
Table 2-3 3rd Mission Itinerary
Days Date Day Activity
1 7-Nov Thu ・Trip from Tokyo to Paris via Frankfurt (Ozaki)
・Meeting with Credit Agricole
2 8-Nov Fri ・Meeting with Nippon Export and Investment Insurance (NEXI) Paris
・Meeting with Japan Bank for International Cooperation (JBIC) Paris
3 9-Nov Sat ・Trip from Paris to London via Dusseldorf (Ozaki)
4 10-Nov Sun ・Meeting with ITOCHU Europe
・Review of the Meetings held in the last week
5 11-Nov Mon ・Meeting with DBJ (Development Bank of Japan, Inc.) Europe Ltd.
・Trip from London to Warsaw via Frankfurt (Ozaki)
6 12-Nov Tue
・Meeting with JETRO Warsaw
・Meeting with Energy Regulatory Office
・Meeting with Ernst & Young, Warsaw
7 13-Nov Wed ・Meeting with Deloitte, Warsaw
・Meeting with PSE Operator
8 14-Nov Thu ・Trip from Warsaw to Tokyo via Frankfurt (Ozaki)
9 15-Nov Fri ・Arrive in Tokyo (Ozaki)
(Source: prepared by the Study Team)
2-12
4) The 4th Mission
The 4th mission was sent from December 8 to 14, 2013 to check the current situation of Energy Market Reform,
which Polish government is going to introduce, using the mechanism in USA and UK as the reference, such as
a) Capacity Payment Mechanism (CPM), and
b) Feed in Tariff (FIT) with Contract for Difference (CFD).
They paid a visit to DTEK and presented the interim report.
Table 2-4 4th Mission Itinerary
Days Date Day Activity
1 8-Dec Sun ・Trip from Tokyo to Helsinki (Ozaki)
2 9-Dec Mon ・Trip from Helsinki to Warsaw (Ozaki)
・Meeting with ITOCHU Warsaw
3 10-Dec Tue
・Meeting with Domanski Zakrzewski Palinka (Law Firm)
・Meeting with Ernst & Young, Warsaw
・Meeting with KPMG, Warsaw
4 11-Dec Wed
・Meeting with Bank Pekao/UniCredit
・Meeting with Deloitte, Warsaw
・Trip from Warsaw to Kiev (Ozaki)
5 12-Dec Thu ・.Meeting with DTEK
・Trip from Kiev to Warsaw (Ozaki)
6 13-Dec Fri ・Rap up Meeting with ITOCHU Warsaw
・Trip from Warsaw to Tokyo via Helsinki (Ozaki)
7 14-Dec Sat ・Arrive in Tokyo (Ozaki)
(Source: prepared by the Study Team)
2-13
5) The 5th Mission
The 5th mission was sent from January 14 to 22, 2014 for making presentations on the draft of the Study to all the
concerned organizations and reflecting their views on the final report.
Table 2-5 5th Mission Itinerary
Days Date Day Activity
1 14-Jan Tue ・Trip from Tokyo to Kiev via Frankfurt (Shimizu, Tanaka, Ozaki)
2 15-Jan Wed ・Trip from Tokyo to Kiev via Munich (Okano, Shoji)
・Preparation for tomorrow’s presentation
3 16-Jan Thu ・Presentation to DTEK
4 17-Jan Fri ・Meeting with Embassy of Japan
・Trip from Kiev to Munich (Shimizu, Tanaka)
5 18-Jan Sat ・Arrive in Tokyo (Shimizu, Tanaka)
・Trip from Kiev to Frankfurt (Ozaki)
6 19-Jan Sun ・Arrive in Tokyo (Ozaki)
7 20-Jan Mon ・Documentation work required by DTEK
8 21-Jan Tue ・Trip from Kiev to Munich (Okano, Shoji)
9 22-Jan Wed ・Arrive in Tokyo (Okano, Shoji)
(Source: prepared by the Study Team)
Photo 2-18 Final Presentation to DTEK held on January 16
(Source: taken by the Study Team)
2-14
6) Persons interviewed during the Study
The Study Team members visited the persons shown in Table 2-6 below to obtain the necessary data and
information.
Table 2-6 Persons interviewed during the Study
Professional Affiliation Position Dates of Interview
DTEK Head, Engineering and Project
Department
2013.9.30-10.1, 2013.10.19,
2014.1.16
DTEK Head, Energy Department 2014.1.16
DTEK Expert, Energy Department 2014.1.16
DTEK Expert, Energy Department 2014.1.16
DTEK Expert, Big Project Department 2014.1.16
DTEK Manager, International affairs 2013.9.30-10.1, 2013.10.17-18
201312.12, 2014.1.16
DTEK International affairs 2013.9.30, 2014.1.16
DTEK Specialist, Foreign Department 2014.1.16
DTEK Head of Coal Mining, Engineering
and Project Department 2013.10.1
DTEK Unit Head, Engineering and Product
Management Department 2013.10.17
DTEK Legal Department 2013.12.12.
DTEK Trading Manager, Coal Sales 2013.9.30
Zakhidenergo Director, Technical Division 2013.10.1, 2013.10.18-19
Dobrotvirska Coal-Fired TPP General Director 2013.10.1, 2013.10.18-19
2014.1.16
Dobrotvirska Coal-Fired TPP Acting Director 2013.10.1, 2013.10.19
Dobrotvirska Coal-Fired TPP Chief Engineer 2013.10.1, 2013.10.19
Lviv Designer Institute Director 2013.10.18
Lviv Designer Institute Chief Engineer 2013.10.1, 2013.10.18
Lviv Designer Institute Project Chief Engineer 2013.10.1, 2013.10.18
National Electricity Regulatory
Commission of Ukraine
Head
Directorate of Power Generation 2013.10.21
National Electricity Regulatory
Commission of Ukraine Directorate of Power Generation 2013.10.21
National Electricity Regulatory
Commission of Ukraine
Head, Directorate of Power
Transmission and Distribution 2013.10.21
Energy Company of Ukraine Head, Energy generation Dept. 2013.10.16
Energy Company of Ukraine Deputy, Energy Generation Dept. 2013.10.16
Energy Company of Ukraine Energy Generation Department 2013.10.16
Energy Company of Ukraine Energy Generation Department 2013.10.16
2-15
State Company ENERGORYNOK Deputy Director of Development 2013.10.22
State Company ENERGORYNOK Deputy Head,
Perspective Development Dept. 2013.10.22
State Company ENERGORYNOK Perspective Development Dept. 2013.10.22
State Company ENERGORYNOK Perspective Development Dept. 2013.10.22
State Company ENERGORYNOK Perspective Development Dept. 2013.10.22
IMEPOWER Consulting Director 2013.10.16
IMEPOWER Consulting Director 2013.10.16
Ministry of Ecology and Natural
Resources of Ukraine
Head of State Environmental and
Geological Examination 2013.9.27
Environmental Institution Center Director 2013.9.27
Activ Solar General Director 2013.10.23
Activ Solar Business Development Manager 2013.10.23
Activ Solar Sales Manager 2013.10.23
Energy Regulatory Office of Poland Chief Consulting Engineer
Markets Development Dept. 2013.11.12
Energy Regulatory Office of Poland Markets Development Dept. 2013.11.12
Energy Regulatory Office of Poland Markets Development Dept. 2013.11.12
PSE Operator, Poland Senior Specialist
Grid Development Strategy Dept. 2013.11.13
PSE Operator, Poland Grid Development Strategy Dept. 2013.11.13
PSE Operator, Poland Senior Specialist
Transmission Services Department 2013.11.13
PSE Operator, Poland Transmission Services Department 2013.11.13
Deloitte, Warsaw Partner, Energy & Resources,
Central Europe 2013.11.13, 2013.12.11
Deloitte, Warsaw Senior Manager, Japanese Service 2013.11.13
Deloitte, Warsaw Manager, Corporate Finance 2013.11.13, 2013.12.11
Ernst & Young, Warsaw Japanese Business Service 2013.11.12, 2013.12.10
Ernst & Young, Warsaw Senior Manager CAP (Japan)
Japanese Business Service 2013.12.10
Ernst & Young, Warsaw Manager, Corporate Finance 2013.11.12, 2013.12.10
KPMG, Warsaw Partner 2013.12.10
KPMG, Warsaw Manager, Corporate Finance 2013.12.10
Domanski Zakrzewski Palinka Partner 2013.12.10
Domanski Zakrzewski Palinka Partner 2013.12.10
UniCredit Director 2013.12.11
Bank Pekao Director 2013.12.11
Bank Pekao Director 2013.12.11
2-16
European Investment Bank Head of Representative in Ukraine 2013.9.27
European Bank for Reconstruction
and Development Senior Banker, Natural Resources 2013.9.6
Japan International Cooperation
Agency (JICA)
Investment Officer
Private Sector Investment Division 2013.12.3
JICA Assistant Director, Europe Division 2013.12.3
JBIC Deputy Director
Power & Water Finance Department2013.10.28
JBIC Power & Water Finance Department 2013.10.28
JBIC, Paris Representative Office Director General 2013.11.8
JBIC, Paris Representative Office Senior Representative 2013.11.8
NEXI Director
Power & Mining Group 2013.9.10
NEXI Vice President, Power & Mining G. 2013.9.10
NEXI, Paris Representative Office Representative 2013.11.8
NEXI, Paris Representative Office Representative 2013.11.8
Development Bank of Japan Inc. Vice President, Corporate Finance
Department 2013.9.5
DBJ Europe Ltd. Head of Corporate and Structured
Finance 2013.11.11
DBJ Europe Ltd. Vice President 2013.11.11
Bank of Tokyo-Mitsubishi UFJ Senior manager
Corporate Banking 2013.9.18
Bank of Tokyo-Mitsubishi UFJ Associate, Corporate Banking 2013.9.18
Credit Agricole Managing Director, Global Head of
Power, Utility & Mining 2013.11.7
Credit Agricole Executive Director 2013.11.7
Credit Agricole, Ukraine Branch Commercial Director 2013.10.23
Credit Agricole, Ukraine Branch Relationship Manager 2013.10.23
Credit Agricole, Ukraine Branch Chief Economist 2013.10.23
Embassy of Japan in Ukraine First Secretary, Economic Section 2013.10.4, 2013.10.22, 2014.1.16
JETRO Warsaw Director General 2013.11.12
JETRO Warsaw Research & Projects Coordinator 2013.11.12
The Chugoku Electric power Co.,
Ltd.
Manager
International Business Section 2 2013.11.28
The Chugoku Electric power Co.,
Ltd.
Assistant Manager
International Business Section 2 2013.11.28
The Chugoku Electric power Co.,
Ltd.
International Business Section 2
Group Management Division. 2013.11.28
2-17
ITOCHU Europe General Manager, Power Project 2013.11.10
ITOCHU Warsaw General Manager 2013.12.9
(Source: prepared by the Study Team)
Chapter 3 Justification, Objectives and Technical
Feasibility of the Project
3-1
(1) Background and Necessity of the Project
1） Scope of the Project
Project site has been prepared for the former expansion plan (225 MW x 3 units) in the existing Dobrotvirska
coal-fired power plant. This new project for No.9 unit is planned to adopt more efficient, ultra-supercritical (USC)
technology (main steam temperature: 600 oC, main steam pressure: 26.4 MPa). The installation of USC
technology advances Japanese manufacture’s participation on this project and reduce the emission of greenhouse
gas such as carbon dioxide.
Figure 3-1 Former Dobrotvirska Power Plant Expansion Plan
(Source: Illustration’s Photo taken by the Study team at Dobrotvirska Power Plant)
Major equipment of the new plant is composed of USC pressure boiler and steam turbine generator equipment.
The others are composed of the following equipment.
3-2
Boiler auxiliary equipment (Regenerative air heater, Forced draft fan, Induced draft fan (IDF), Primary air
fan, Coal mill, etc.)
Turbine auxiliary equipment (Condenser, Boiler feed pump, Condensate pump, Condensate booster pump,
Circulating water pump, Low pressure feed water heater, Deaerator, High pressure feed water heater,
Condensate polishing equipment, etc.)
Generator auxiliary equipment (Seal oil system, Cooling system, etc.)
Electrical equipment
C&I equipment
Environmental facilities (Electrostatic Precipitator (ESP), Flue-gas Desulfurization (FGD) equipment,
Denitrification equipment, etc.)
Compressed air equipment
Water treatment facilities
Wastewater treatment facilities
Ash handling facilities
Cooling water equipment
Coal handling equipment
Limestone handling equipment
Gypsum handling equipment
Fire prevention equipment, etc.
Table 3-1 shows scope of works for this project.
Table 3-1 Scope of Works
Item Contents
Name Dobrotvirska Power Plant
Unit No. 9
Scope of Works
Coal-fired power plant construction work
Civil engineering work
Detailed design of coal-fired power plant
Engineering, procurement and construction work for boilers, boiler auxiliaries, turbine,
turbine auxiliary, generator, generator auxiliary, electrical, C&I, environmental,
compressed air, cooling water, coal and ash handling, limestone handling, gypsum
handling, and fire prevention equipment
Commissioning of the power plant
Consulting work
Out of Scope
For these terms, it is assumed to be implemented by local jurisdiction.
Development costs of coal mine
Removal and relocation work associated with this project
(Source: prepared by the Study Team)
3-3
2） Analysis of the Present Situation and Future Forecast
Energy strategy of Ukraine for the period until 2030 was approved by the Cabinet in June 2006. Energy policy in
Ukraine is planned based on the energy strategy.
Figure 3-2 shows the forecast of the installed capacity and Figure 3-3 shows the forecast of electricity generation.
Energy strategy has been significantly modified and revised down in 2012 because of the world economic
recession. Accordingly, the annual power production forecast and power development plan has also been revised
downward.
Power generation capacity is assumed to be 53.5 GW in 2020 and 65.2 GW in 2030 in the power development
plan (2012 version).
Also annual power production is assumed to 237 TWh in 2020 and 282 TWh, in 2030 in the power development
plan (2012 version).
Figure 3-2 Forecast of the Installed Capacity
(Source: Energy strategy of Ukraine until 2030 / 2006 and 2012 version)
3-4
Figure 3-3 Forecast of the Electricity Generation Capacity
(Source: Energy Strategy of Ukraine until 2030 / 2006 and 2012 version)
New large-scale power development plan does not exist in 2013. The following is the information by interviews.
In the nuclear power division, it is planned to execute feasibility study of Khmelnytsky power plant expansion
plan of 1,000 MW x 2 units by state-owned enterprises Energoatom.
In the hydro power division, it is planned to execute rehabilitation for existing power plant and construction for
new power plant by International Bank for Reconstruction and Development and European Bank for
Reconstruction and Development (EBRD) loan.
In the thermal power division, there has been no new project for 20 years because it is focused on the
rehabilitation of existing power plant. On the other hand, existing old power plants are operating in low heat
efficiency such as 29 to 34%. Replacement from the existing power plants to high-efficiency thermal power plants
is necessary from the viewpoint of environmental impact reduction, energy saving (fuel cost reduction) and heat
efficiency improvement.
3-5
3） Effect caused by the Project Implementation
It is supposed to export the generating power from this plant to Poland. As a result, this project is expected to
contribute to the gain of foreign currency for Ukraine.
In Poland, 6,000 MW capacities of the existing power plants are forced to shut down by 2017 in order to achieve
the EU environmental standards. It causes power supply shortage in 2016-2017 and power supply shortage in
winter season in 2017 to be assumed to as 1,100 MW. Therefore, it is possible to contribute to the power supply
stabilization of Poland by this project.
Also it is possible to contribute to the power supply stabilization of domestic power system in Ukraine by
connecting to domestic power system power to international power system.
In addition if the domestic power demand growth is increasing as planned then enhancement of power supply is
necessary. The current supply capacity is insufficient ability in the future. But enhancement of importing power
influences on instability of power demand and supply balance and not effective utilization of domestic natural
resource. As a consequence USC power plant installation is essential for the environment prevention and the
effective use of domestic natural resources.
If the growth in demand is stagnant in the future then there is no need to install environmental facility to existing
old power plants and it is possible to reduce operation and maintenance costs. It contributes to the economic and
financial improved.
4） Comparison with other Options
The following four alternatives are assumed except the proposed project.
a) Alternative 1: Natural Gas-fired power plant
b) Alternative 2: Coal-fired power plant (Sub-critical type)
c) Alternative 3: Imported Capacity to be increased (No new power plant)
d) Alternative 4: Renewable energy
a) Alternative 1: Natural Gas-fired Power Plant
Coal is one of the few valuable energy resources in Ukraine. Basic policy in Ukraine is to effectively utilize the
coal and import gas and other natural resources. As the result Ukraine can deal with domestic energy demand and
supply matters. Therefore coal industry is the major business in Ukraine.
DTEK now owns ones coal mines and manages coal production and electricity business. DTEK dominates 65 %
of the gross domestic power generation in power sector and 50 % of gross domestic coal production in coal sector
in 2013. In case of transition from coal to gas combustion at boiler, it causes a lot of energy security problem such
as unemployment issue of many workers at coal mine, land acquisition, procurement and long-term fuel purchase
3-6
contracts.
Gas pipeline is already prepared for stable gas supply to gas-fired power plant. However it can’t be a realistic
alternative on the energy policy in Ukraine intended to reduce gas imports because of the gas dispute with Russia
in the past.
b) Alternative 2: Coal-fired Power Plant (Sub-critical type)
Coal is the primary industry in Ukraine and shall be actively utilized. However coal is used effectively because of
the limited resources and keeping competitiveness.
It is necessary to take into consideration the efficiency difference between the conventional and high-efficiency
type. In case of installation of high-efficiency coal-fired power plant, the time to resource depletion become
approximately 1.5 times longer. In addition it is assumed that if energy policy does not change significantly the
next few decades then the high efficiency type installation is better than conventional installation economically.
Low initial cost does not mean better economical solution all the time because operation and maintenance cost is
more important for long-term operation.
c) Alternative 3: Imported Capacity to be increased (No new power plant)
This alternative means that this project is canceled. Power supply shall be managed by increasing amount of
import power. This alternative can not deal with demand increasing. Therefore it is decided to use the power
trading for long-term. It takes advantage of the power trading for peak load corresponding but it is possible to
depart from the government policy in Ukraine. The use of the imported power makes Ukraine huge economic
damage.
In addition decreasing of supply capacity from coal-fired power plant, it causes stagnation of the coal industry and
unemployment issue of many workers at coal mine as same as Alternative 1.
d) Alternative 4: Renewable Energy
In the energy strategy, it is proposed to actively introduce renewable energy. From the viewpoint of environmental
prevention, utilization of renewable energy such as photovoltaic and wind mill power shall be promoted.
However it is not realistic solution to replace the renewable energy because of the huge costs and
long-implementation time. In comparison to fossil fuel, energy density of renewable energy such as photovoltaic
and wind mill power is lower. In addition to that output from renewable energy is influenced on the natural
environment so that stably supply power is not expected.
From the above each alternative has problems which shall be solved. In order to obtain the same effect as the
proposed project, it is necessary to spend enormous cost and time.
Therefore USC power plant is the best solution to manage the power demand matters and achieve EU
3-7
environmental standard without any influence on stable power supply in Ukraine.
3-8
(2) Efficiency and Rationalization of Energy Usage
This project implements the efficiency and rationalization of energy usage by adopting USC power plant.
Pulverized coal-fired power generation systems are widely used because of the reliability and established
technology. There have been a lot of introduction examples for USC power plant in Japan since introduce of USC
method introduced in Tachibana-wan TPP (1,050 MW x 2 units) by J-power in 2000. Thermal efficiency at
generator end of thermal power generation is improved to 43% and efficiency and rationalization of use of energy
became possible.
Additionally it is also effective for environmental protection. USC power plants can achieve lower emissions of
carbon dioxide, sulfur oxide and nitrogen oxide.
3-9
(3) Various Types of Studies required for the Decision of Project Scope
1） Demand Forecast
Power demand is forecasted to be 53.5 GW in 2020 and 65.2 GW in 2030 in power development plan (2012
version). Amount of annual power production is forecasted to be 237 TWh in 2020 and 282 TWh in 2030 in f
annual power production forecast (2012 version).
2） Necessary Analysis of Problems for the Appraisal and Determination of Project Scope
Table 3-2 shows extraction of the important items in each aspect.
Table 3-2 Extraction of the Important Items in each Aspect
a) Technical aspects b) Environmental aspectsc) Economic and
financial aspects
d) Project development
aspects
1. Steam conditions
2. Coal properties
3. Reduction of NOx,
SO2 and Dust
4. Equipment layout
1. Reconfirmation of the
environmental
standards, the value
and enforcement year
2. Necessity confirmation
of Environmental
Impact Assessment
(EIA) application
1. Economic and
financial analysis
1. Contract method
(Source: prepared by the Study Team)
a) Technical Aspects
1. Steam Conditions
Aiming for high temperature and high pressure steam condition is important for high efficiency coal-fired
power plant. Table 3-3 shows type of power plant.
In recent years, power generation technology by SC and USC has been adopted as a high-efficiency
coal-fired power plant with high reliability.
In this section it is considered which power generation method is suitable for this project from technical and
economical point of view. As the result USC power generation technology is adopted because of the high
efficiency, less environmental impact and the possibility of participant for Japanese companies.
3-10
Table 3-3 Type of power plant
Name Abbreviation Steam conditions
Sub Critical － Steam pressure is lower than 22MPa as the critical pressure
Super Critical SC Steam pressure is higher than 22MPa as the critical pressure
Ultra Super Critical USC SC and the steam temperature is higher than 593 oC
(Source: prepared by the Study Team)
2. Coal Properties
Basic design of boiler, combustion system, coal storage yard, coal handling system relies on the coal
properties. Table 3-4 shows coal properties for this project. Domestic bituminous coal is utilized. Bituminous
coal’s lower heating value (LHV) is more than 5,000 kcal/kg. The moisture is low and Volatile matter content
is high value. It means that bituminous coal is suitable for boiler combustion. Therefore bituminous coal is
used for coal-fired power plant around the coal mine. This project is also planned to be supplied from
neighbor coal mine. In comparison to boiler by foreign companies, planned Japanese boiler for this project
has advantage in the combustion of bituminous coal.
Table 3-4 Coal properties
Item Coal properties
Coal type A B
LHV kcal/kg 5,280 5,782
Ash % 28.3 26.0
Sulfur % 1.9 1.6
Moisture % 8.1 3.0
(Source: prepared by the Study Team on the basis of data from DTEK)
3. Reduction of NOx, SO2 and Dust
Optimum desulfurization system is applied for this project to consider the emission properties from the
existing power plant, environmental standards in Ukraine and EU, installation space, construction cost,
operation and maintenance cost. Also the possibility of participant for Japanese manufactures shall be
considered.
4. Equipment Layout
There was an expansion plan (225 MW x 3 units) before the collapse of the former Soviet Union. Foundation
work, boiler steel structure, intake and discharge channels have been already constructed. It is necessary to
study the possibility of reuse and demolition existing facilities at the basic design-term.
b) Environmental Aspects
1. Reconfirmation of the Environmental Standards, the Value and Enforcement Year
3-11
It is necessary to study the regulated value and the introduction year of the applied environmental standards.
2. Necessity Confirmation of EIA Application
EIA for an expansion plan (225 MW x 3 units) is already acquired before the collapse of the former Soviet
Union. It is necessary to study if the EIA is valid or not at the basic design-term.
c) Financial and Economic Aspects
1. Economic and financial analysis
It is necessary to study the feasibility of projects from the economical aspect.
3-12
d) Project Development Aspects
1. Contract method
Generally Engineering Procurement and Construction (EPC) full turnkey contract is common for large-scale
thermal power plant construction. Also this coal-fired power plant project is supposed to be contracted by
EPC full turnkey.
EPC full turnkey contract requires carrying out the services of all necessarily comprehensive works such as
engineering, procurement and construction. EPC full turnkey contract includes the design of the equipment,
production, procurement, transportation, inspection, construction, installation, commissioning, performance
test, operation and maintenance training.
On the other hand, in case of individual contract, it is necessary to contract for each lot unlike the EPC
turnkey contract. It is important to decide the interface for each contractor. Further, it is necessary to clearly
define the project schedule such as delivery time, completion day and turnover.
The followings are example of lot split cases.
・ Boiler lot
・ Turbine lot
・ Coal and ash handling lot
・ Civil, architecture and installation lot
In the case of individual contract, cost down effect is expected by principle of competition. There used to be
a lot of proposals from companies previously when the individual bids are applied. Currently only one
company or a few tend to participate the bidding. If there is no comparison or other choice, it is expected to
be difficult to manage contract negotiations. In this case, it is not possible to take advantage of the benefits of
the individual contracts. Moreover, the owner side must manage adjust the schedule.
Therefore EPC full turnkey contract is recommendable for this project.
3-13
3） Study of Engineering Practice
In order to save energy and reduce environmental impact USC technology is adopted for this project. Table 3-5
shows steam conditions and the plant performance. In comparison to sub-critical type, it is expected that plant
efficiency is improved about 106% with USC technology.
Table 3-5 Steam Conditions and the Plant Performance
Items Sub Critical Super Critical Ultra Super Critical
Main steam pressure 16.6 MPa 24. 1MPa 26.4 MPa
Main / reheat steam temperature 538 oC /538 oC 566 oC /566 oC 600 oC /610 oC
Gross efficiency 100 % (Base) 104 % 106 %
Emission of CO2 100 % (Base) 96 % 94 %
Amount of cooling water 100 % (Base) 92 % 90 %
(Source: prepared by the Study Team)
3-14
(4) Overview of the Project Plan
1） Basic Policy of Project Scope Determination
a) Project Scope and Study of the Technical Aspects
・ Data acquisition and analysis of power sector
・ Investigation of the existing power plant, substation and transmission line and coal properties for the
specification of this project
・ Conceptual design based on the above specification
b) Environmental and Social Considerations
・ Impact on the social environment of the project: Investigation of land acquisition, promotion of
employment, economic benefit effect, greenhouse gas reduction, per impact on other social environment
due to the project construction
・ Investigation of permission from government, environmental impact assessment, related laws and
regulations
c) Financial and Economic Analysis
・ Integration of the construction costs based on the proposed specification
・ Integration of the financial and economic analysis for the business profitability to examine the scheme
from electricity sales
2） Conceptual Design and the Applicable Specification
Major power generation facilities are roughly composed of Boiler, Turbine and environmental facilities.
The Boiler is tower-type pulverized coal firing boiler. The Turbine is high, medium and low pressure turbines and
a tandem compound Turbine composed of a single axis.
As the environmental facilities, Electrostatic Precipitator and Flue Gas Desulphurisation equipment will be
installed. It is planned that the composition of this equipment will comply with the EU environmental standard on
flue gas emissions.
Figure 3-4 shows the configuration of the Power Plant. Heat supply is expected to be sent from existing power
plant to the district. Heat supply system that is typically required in the European market is not prepared by this
project.
3-15
Figure 3-4 Configuration of the Power Plant
(Source: prepared by the Study Team)
a) Boiler and Auxiliaries
(i) Basic Specification
Equipment herein specified to comprise:
One reheat steam generating unit, ultra super critical, once-through type, balanced draft operation. The boiler is
designed for indoor operation arranged in the form of self contained construction and suspended from structural
steelwork within the boiler house.
The boiler is equipped with one Forced Draft (FD)-fan (100%). The back end of the boiler is equipped with one
regenerative air heater, two electrostatic precipitators (ESP) followed by two induced draft fans (ID-fans) and one
flue gas desulphurization plant (FGD).
The boiler is designed with adequate tube spacing to avoid plugging and ash build-up, to allow for proper cleaning by soot blowers and to permit maintenance access.
(ii) Circuit arrangement of the boiler on the Water-steam side
The circuit arrangement of the boiler on the water-steam side is shown in the flow diagrams.
For start-up and in order to control failures the unit is equipped with a safety by-pass station on the HP steam side
and with safety valves on the reheater steam side designed for the max. steam flow.
IP Turbine
HP Turbine
LP Turbine
Generator
Condenser
HP-Heater
LP-Heater
DRT
Grand steam condenser
3-16
Figure 3-5 The circuit arrangement of the boiler on the water-steam side (example)
(Source: prepared by the Study Team)
The turbine bypass system is connected from the main steam pipe in front of the high pressure turbine to the cold
reheat steam pipe to bypass the high pressure turbine. The turbine bypass system is also connected from the hot
reheat steam pipe in front of the intermediate pressure turbine to the condenser to bypass the intermediate pressure
and low pressure turbines.
In this way, the turbine bypass system has the following functions:
Improving start-up characteristics of the plant
When the plant starts, the boiler load is adjusted by the turbine bypass system, so that the boiler steam
temperature becomes the optimal ventilation temperature of the turbine.
Absorbing the load difference between the boiler and turbine when the load is changed
When there is a load difference between the turbine and boiler when the load is interrupted, the turbine
bypass system absorbs the surplus load of the boiler.
An auxiliary function of the boiler superheater safety valve
When the pressure of the boiler superheater becomes excessive, the turbine bypass system reduces the
pressure.
3-17
(iii) Circuit arrangement of the boiler on the flue gas side
The circuit arrangement of the boiler on the flue gas side is shown in the flow diagram Figure 3-6.
Figure 3-6 The circuit arrangement of the boiler on the flue gas side
(Source: prepared by the Study Team)
3-18
b) Turbine
The steam turbine is composed of the turbine main unit and BOP (Balance of Plant) devices (such as condensers,
deaerator, heaters and pumps). The specifications of the steam turbine and BOP devices are shown in the table
below.
An illustration (bird’s eye view) of the tandem compound steam turbine is shown on the next page. Steam
discharged from the high pressure turbine is reheated at the boiler, and brought back to the intermediate pressure
turbine to rotate the turbine blades. Then, the steam is led to the centre of the low pressure part from the
intermediate pressure turbine. The steam at the outlet of the low pressure turbine is cooled at the condenser on the
bottom of the turbine and reused as boiler feed water.
Table 3-6 Steam Turbine Basic Specifications
Item Specification
Type Tandem compound
TC4F
Output 650 MW (gross)
600 MW (net)
Steam Conditions
(turbine inlet)
Pressure: 26.4 MPa
Temperature: 600°C/610°C
Turbine Casing High and
Intermediate pressure: 1
Low pressure: 2
Extraction Stage High and
Intermediate pressure: 4
Low pressure: 4
High Pressure (HP), Intermediate Pressure (IP), Low pressure (LP)
(Source: prepared by the Study Team)
Table 3-7 Steam Turbine BOP Device Specifications
Item Specification
Condenser Single Shell type
Feed Water Heater High pressure: 3 heaters
Low pressure: 4 heaters
Horizontal U-tube type
Deaerator Single Shell type
Condensate pump 100% × 2
Condensate booster pump 100% × 2
(Source: prepared by the Study Team)
3-19
Figure 3-7 Steam Turbine Bird’s Eye View (600 MW Class)”
(Source: prepared by the Study Team)
c) Steam Turbine Auxiliary Machine
(i) Condenser
Figure 3-8 shows Bird’s Eye View of the condenser.
Figure 3-8 Condenser Bird’s Eye View
(Source: prepared by the Study Team)
HP/IP Combined Casing
2LP Casing ( 4 Flow )
3-20
(ii) Feed-water heater and deaerator
Figure 3-9 and 3-10 shows Bird’s Eye View of the feed-water heater and deaerator :
Figure 3-9 High and Low Pressure Feed Water Heater
(Source: prepared by the Study Team)
Figure 3-10 Deaerator
(Source: prepared by the Study Team)
3-21
d) Generator
The structure of the generator is shown in the Figure 3-11 by a bird's-eye view. This structure is typical structure
based on many experiences in the past.
Figure 3-11 Generator Bird’s Eye View
(Source: prepared by the Study Team)
3-22
e) Generator Auxiliary Machines
(i) Seal oil system
Seal oil system is to seal hydrogen to cool rotor and core in a generator. The system removes impurities by
vacuum processing from separated oil from lubrication system and supplies oil to seal of generator both sides.
Generator inner pressure difference between hydrogen and seal oil are kept by mechanical differential pressure
control valve. The hydrogen side oil is returned to the lubricant oil system after hydrogen removal at extended
batch and float trap, and mixture the oil of the air side at air extraction tank.
(ii) Cooling system
Stator cooling system is to supply high purity water to stator coil of water cooling. After the water which raised
purity at ion exchange tower is pressurized with a pump, and having cooled off with an air conditioner, it is
controlled to regulated temperature at a temperature control valve. The pure water is transported to stator coil
through the membrane filter. The rotor cooled by hydrogen gas is composed of a hydrogen gas cooler, a hydrogen
gas cylinder storage, etc.
3-23
f) Instrument & Control System
(i) Basic concept
Start, stop and normal operation of the plant is operated by the minimum number of staff in the central control
room.
All necessary plant operation information is constantly monitored at the operator station of central control room.
Large-scale screen is not but can be installed in the central control room. The reason is appropriate number of
operator station is installed in the central control room including the operator station for exclusive use of the
leader.
Minimum hardware controller as the urgent operation of the plant is installed.
At the time of accident of main and auxiliary equipment, runback to low load or safely stop without needing the
regulated manual operation will start.
(ii) Automation
i) Plant automatic start
The plant start is automated. But manual operation is necessary at plant cold start operations (electrical system, completion of each system finishing) and at the time of operations such as the following examples.
Circulating water system
Auxiliary steam system
Closed cooling water system
Compressed air system
Turbine oil system
Turbine turning system
Generator seal oil system
Generator hydrogen system
ESP insulator heating
Waste water system
FGD waste water treatment system
Manual operation is usually not required at the time of warm and hot start.
3-24
ii) Plant normal operation
The test operation for check of the important equipment is conducted by the manual start operation from central
control room. Each test operation is conducted in response to the manual start order sequentially.
(Example)
Turbine main valve closing test
Turbine emergency oil pump start test
iii) Plant automatic shutoff
The automation range at the time of the plant stop is from normal operation to a condensate pump stop, and
meanwhile, the manual operation does not need.
At a long term maintenance stop by the plan of customer, manual operations are necessary such as the following
example after automatic shut off.
(Example)
Circulate water system
Vacuum break
Auxiliary steam system
Closed cooling water system
Compressed air system
Turbine oil system
Turbine turning system
Generator seal oil system
Generator hydrogen system
FGD waste water treatment system
3-25
iv) Trip Interlock
Boiler, turbine and generator tripping interlock concept is shown in Table 3-8
Table 3-8 Tripping interlock concept
Event Concept
Boiler Failure Boiler will be tripped immediately by shutting-off of the fuel shut off
valve. Turbine will be concurrently tripped to prevent the wet steam due
to the tripping of the boiler by Boiler trip signal.
Turbine Failure Turbine will be tripped immediately by closing of the turbine valves, and
the bypass system will be activated. However, if the bypass system is not
activated, Boiler will be tripped immediately.
By Turbine trip, the Generator will be concurrently tripped, which means
the simultaneous opening of both generator circuit breaker and excitation
field.
Generator failure Generator will be immediately tripped by the simultaneous opening of
both generator circuit breaker and excitation field switch, and Turbine
will be concurrently tripped for stopping generator and preventing the
extended accident.
Grid failure Disconnecting from the grid, the plant will reduce the load to minimum
load by using the bypass system and continue the island operation.
(Source: prepared by the Study Team)
3-26
g) Air Quality Control System-AQCS
The flue gas coming from the boiler has to be cleaned from hazardous substances.
At first the Electrostatic precipitator (ESP) will remove dust. In a second step the flue gas will be cleaned from the
SO2 by a flue gas desulphurisation plant (FGD).
(i) Electrostatic precipitator (ESP)
To separate the dust from flue gas one electrostatic precipitator (ESP) is arranged downstream of the regenerative
air preheater.
The flue gas passes through several fields arranged in series and parallel. While passing these fields, the
high-voltage electrode system of the ESP generates an electrical effect, which affects the flue gas flow in such a
manner, that the dust is separated from the gas.
Figure 3-12 ESP Bird’s Eye View
(Source: prepared by the Study Team)
3-27
(ii) Flue gas desulphurisation plant (FGD)
The FGD mainly removes SO2 out of the flue gas and is based on a wet limestone process to produce gypsum as a
by-product.
The FGD consists mainly of:
Flue gas system
Absorber system
Oxidation Air System
Mist Eliminator System
Drainage System
Limestone Slurry System
Gypsum System
Process Water System
Figure 3-13 FGD Bird’s Eye View
(Source: prepared by the Study Team)
3-28
3） Overview of the proposed Project
Project site has been prepared for the former expansion plan (225 MW x 3 units) in the existing Dobrotvirska
coal-fired power plant. This new project for No.9 unit is planned to adopt more efficient, ultra-supercritical (USC)
technology (main steam temperature: 600 oC, main steam pressure: 26.4 MPa). The USC technology installation
promotes Japanese manufacture’s participation on this project and reduces the emission of greenhouse gas such as
carbon dioxide.
It is supposed to export the generating power from this project to Poland. As a result, this project is expected to
contribute to the acquisition of foreign currency for Ukraine.
Table 3-9 shows project cost.
Table 3-9 Project cost
Item Unit Price
Power plant equipment and common equipment (civil, intake, discharge and
coal handling equipment) [US$ million] 790.9
Contingency funds [US$ million] 79.1
Project cost [US$ million] 870.0
Unit cost [US$/kW] 1,450
(Source: prepared by the Study Team)
3-29
4） Solutions for the proposed Technologies and Systems Adoption
There is a great advantage of the higher plant efficiency to adopt USC technology. On the other hand, it is
important to train operator and maintenance staff because of the plant automation. Therefore, it is necessary to
equip a simulator of USC power plant and to enhance measures for operation and maintenance training.
Also feed water quality control is so important for USC power plant that it is necessary to have knowledge of feed
water quality control and training of feed water quality control for operation period.
Under EPC turn-key contract, the owner appraises guarantee item in contract form and no defect of equipment for
installation and commissioning-term, with the result that the power plant is taken over to the owner side.
In addition, various technical problems often occur after the commercial operation. It is necessary to be supported
by power plant experts to deal with the various technical problems.
Existing Dobrotvirska power plant is exporting the half of the generating power to Poland, utilizing 220kV
transmission line. On the other hand, 750kV transmission line, which is about 20 km from Dobrotvirska power plant
toward the south, is not being utilized because of nuclear power plant’s shutdown for long-term.
It is one of the alternatives to export power to Poland, taking advantage of this existing 750kV transmission line for
this project. In that case, it is necessary to construct a new 750kV transmission line and a substation for the
connection between the power plant and 750kV transmission line.
Chapter 4 Evaluation of Environmental and Social Impacts
4-1
(1) Analysis of the Current Status of the Environmental and Social Aspects
1) Location of the Project Site
The project relates to the expansion of the existing Dobrotvirska Power Plant. The power plant site is located in
Kamenka-Bug district, Lviv State, approximately 50km northeast of Lviv City and 14km north of Kamenka-Bug
City. In the south side of the site, Dobrotvir Town is located and the north side also faces a village. Coal ash
disposal site of the power plant is located 1km south-southwest of the project site.
Figure 4-1 Location of the Power Plant Site
(Source: prepared by the Study Team from Google Map)
Dobrotvirska Power Plant
Kamenka-Bug City
Dobrotvirska Power Plant
Coal Ash Disposal Site
Kamenka-Bug Town
N
N
4-2
2) Natural Environment
a) Meteorology
Ukraine is located at 44-52 degrees north latitude and 24-40 degrees east longitude. Northern and western areas
are in the cool temperature zone and have humid continental climate with relatively high precipitation. The
southeastern area has a dry steppe climate, and the Crimean Peninsula has a relatively mild Mediterranean
climate.
The southern area sometimes suffers a serious water shortage involving water supply restriction. Carpathian area
is the highest with yearly precipitation of 1,200-1,600mm, and the eastern area is the lowest with the yearly
precipitation of 300mm.
In Lviv which is the nearest major city from the power plant site, the annual average temperature is 7.1℃, the
annual average high temperature is 10.5 ℃, the annual average low temperature is 3.7℃, and the annual
precipitation is 600mm.
The monthly average temperature and the precipitation in Lviv are shown in Table 4-1
Table 4-1 Monthly Average Temperature and Precipitation in Lviv
Month Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec.
Average high
temperature
(℃)
-1 0 5 11 17 20 21 21 17 11 4 0
Average low
temperature
(℃)
-5 -5 -1 3 8 11 12 12 8 4 0 -3
Precipitation
(mm) 30 30 30 40 60 80 90 70 50 40 40 40
(Source: prepared by the Study Team from ZenTech Home Page)
4-3
b) Geography
Half land of Ukraine is a flat field, with Polesye Marsh area in the north, Donetsk hills in the east, and the high
land stretching from Carpathian Mountains in the west. The flat field in the central and southern area is covered
with rich chernozem (black earth) and used for field of wheat and other crops. 5% of the land is a high land
stretching from Carpathian Mountains toward the southern area of Crimean Peninsula. The area around the power
plant site is a flat area without hills.
c) Rivers
Dnieper River flows through the center of Ukraine, Dniester River flows in the west, both toward Black Sea.
Dnieper, the third biggest river in Europe, next to Volga and Danube, is used not only for public water,
hydropower generation, but also for the main water traffic route.
There are no large rivers around the power plant site except small rivers and irrigation canals (Figure 4-2). A
reservoir, which is an artificial pond installed at the time of construction of the power plant and the town of
Dobrotvir, is located in the east area of the power plant site. This reservoir supplies cooling water and plant water
for the operation of the power plant, and thermal effluent is discharged from the discharge channel extending 1km
north and 6km south of the power plant and returns to the reservoir.
Figure 4-2 Rivers and Waterways Around the Power Plant
(Source: prepared by the Study Team from Google Map)
d) Ecosystem
The land of Ukraine is categorized into 3 zones in view of vegetation (Figure 4-3).
Dobrotvirska Power Plant
South Outlet
North Outlet
4-4
・ Forest zone
The forest zone is located adjacent to Belarus, in latitude north of Kiev, consisting of low dump area covered
mainly with forest and marsh. The soil is poor and dairy is the main industry.
・ Forest steppe
Forest steppe extends in the south of the forest zone from Kirovohrad, crosses Donieper and up to Kremenchug
and Kharkiv. Adequate precipitation, mostly concentrated in spring and early summer, makes this area the richest
agricultural area of Ukraine, with sugar beet, autumn-sown wheat, corn, sunflower and various other crops.
・ Steppe zone
Steppe zone extends in the south of forest steppe. This is a flat area with few valleys and dry climate. Major crops
are autumn-sown wheat, corn and sunflower.
Plants living in Ukraine include 6,086 species of vascular plants, 5,227 species of fungi, 1,322 species of
bryophyte and 4,908 species of algae. Fauna living in Ukraine includes 35,000 species of insects, 117 species of
mammals, 400 species of birds, 21 species of reptiles, 17 species of amphibian, and 182 species of fish. 440
species of the above-described species are precious species. Forest zone is especially rich in precious plant
species.
There are 7,000 protected areas in Ukraine with the total area of 2.8million ha, of which forest zone is dominant.
4-5
Figure 4-3 Vegetation in Ukraine
(Source: UKRAINE FAA119 BIODIVERSITY ANALYSIS: ACTIONS NEEDED FOR CONSERVATION, the
United States Agency for International Development (USAID), 2011)
Figure 4-4 Protected Areas of Ukraine
(Source: UKRAINE FAA119 BIODIVERSITY ANALYSIS: ACTIONS NEEDED FOR CONSERVATION, the
United States Agency for International Development (USAID), 2011)
4-6
3) Environmental Pollution
a) Air Quality
The measurement of pollutant in the ambient air in Ukraine is conducted at over 162 points in 53 cities by
Hydromet (State Hydrometeorological Service). There are 6 monitoring stations on data in Liviv (Figure 4-5). The
monitoring stations have not been renewed since the time of Independence in 1991. The monitoring frequency is
once a day for PM, four times a day for SO2 and NO2. Continuous measurement conducted in Japan is not
performed.
The pollutants contained in the exhaust gas emitted from fixed emission sources such as the power plant is
measured by the State Ecological Inspectorate (SEI). The project area is located away from Liviv and the air
quality measurement by Hydromet is not likely to be conducted. There is no other large fixed emission source
near the power plant site, and the current air quality status is supposed to be mainly influenced by emission gas
from the power plant. The existing units of the power plant are equipped with scrubber or electrostatic
precipitators, but not with desulfurization and denitration equipment. There is information that the existing units
do not meet the emission standards of Ukraine and EU, and the current pollution level needs to be assessed.
Figure 4-5 Air Quality Monitoring Points in Ukraine
(Source: Environmental Performance Reviews UKRAINE Second Review, UNITED NATIONS, 2007)
b) Water Quality
The measurement of water quality in Ukraine is conducted at over 240 points with 374 measurement equipment in
151 water areas presumably by Hydromet mentioned above, and also by Ministry of Health and the state authority.
4-7
The water quality data around the power plant site has not been acquired. There is no other large fixed discharge
source near the power plant site, and water discharge from agricultural activity in the surrounding area and sewage
discharged by the households are supposed to be the main water pollution source.
In this project, thermal effluent will be discharged from the discharge channel extending 1km north and 6km south
of the power plant into the reservoir. Considering that thermal effluent will be cooled down by heat release while
flowing in the discharge channel, and that the reservoir is quite large (200-500m width and over 10km length), the
temperature rise in the whole river is not predicted. The prediction of the extent area of temperature rise should be
conducted in the future.
c) Noise
The measurement result of noise level around the power plant site has not been acquired. It was confirmed during
the field survey that there is no other large noise generation source near the power plant site, and noise level
within the power plant site and near the boundary of the site is not significantly high. Nevertheless, the assessment
of the current noise level should be conducted; because there is a residential area in the north and south of the
power plant site.
d) Waste
Waste generated during the project operation includes coal ash and plaster. Coal ash disposal site is already
established, treating coal ash by slurry method. The vast area of the disposal site is still unused, having sufficient
capacity for coal ash disposal, and the capacity for plaster disposal is to be discussed. The reuse of coal ash and
plaster into brick and others is proposed by the project proponent. The capacity of disposal site and the feasibility
of reuse of waste are the issues to be considered.
Photo 4-1 Current Status of Coal Ash Disposal Site
(Source: prepared by the Study Team)
Coal Ash Slurry Outlet
4-8
4) Social Environment
a) Land Use
The major area of Ukraine consists of fertile flatland (steppe) and hills, with a part of Carpathian Mountains (the
highest peak of Ukraine: 2,061m) in the west and Crimean Peninsula in the south. Approximately 58% of land in
Ukraine is used for agriculture, 13% meadowland and 18% forest area. The area around the power plant is used
primarily for agriculture, with relatively vast forest area.
b) Social Infrastructure
The above-described Dobrotvirska Town in the south of the site has been constructed in 1951 at the beginning of
the existing power plant project in the period of the former Soviet Union to accept workers for the power plant,
including the river and the artificial reservoir. The initial population was about 1,500, which has expanded today
to 6,500 inhabitants and remains in the same level since 2000. On the implementation of the project, already the
infrastructure such as accommodation, hospital and school had been established. The access road to the power
plant is the main road of the town.
Table 4-2 Population of Dobrotvirska Town
Year 1959 1970 1979 2001 2010 2011 2012 2013
Population 1,528 3,272 3,894 6,685 6,437 6,457 6,457 6,480
(Source: prepared by the Study Team from Wikipedia)
c) Traffic
Highway 17 running on the south of the project site and the railway station located in the west of Dobrotvirska
Town constitute the traffic network around the power plant site.
4-9
(2) Environment Improvement Effects by Project Implementation
1) Environmental Mitigation Measures for Air Quality
In this project, the project proponent requests the compliance to European Union（EU）emission standards as well
as Ukraine domestic standards concerning air pollutant. The installation of the flue-gas treatment equipment
described below is the basic policy of this project in this context.
・ Sulfur Oxides（SOx）
As the existing units are not equipped with Flue Gas Desulfurization（FDG) system to absorb and remove SOx in
exhaust gas, SOx contained in exhaust gas is directly discharged into ambient air. It is proposed in this project to
install wet type flue gas desulfurization method of a limestone-gypsum method using lime as desulfurization
agent, which is globally used for its high removal efficiency (85-98%*).
(Source :(Environmental, Health, and Safety（EHS) Guidelines for Thermal Power Plant (International Finance
Corporation（IFC) / World Bank (WB), 2008)
・ Nitrogen Oxides（NOx）
As the existing units are not equipped with denitration system to absorb and remove NOx in exhaust gas, NOx
contained in exhaust gas is directly discharged into ambient air. It is proposed in this project to install: Selective
Catalytic Reduction (SCR)-type denitration system using ammonia as denitration agent, which is globally used for
its high removal efficiency (85-98%*).
(Source :(Environmental, Health, and Safety（EHS) Guidelines for Thermal Power Plant (International Finance
Corporation（IFC) / World Bank (WB), 2008)
・ Particle Matter (PM) (dust)
The existing units are equipped with an old-type wet scrubber that collects and removes PM in the exhaust gas. It
is proposed in this project to install Electro Static Precipitators（ESP), which is globally used for its high removal
efficiency (96.5-99.95 %*).
(Source :(Environmental, Health, and Safety（EHS) Guidelines for Thermal Power Plant (International Finance
Corporation（IFC) / World Bank (WB), 2008)
Electricity produced by this project is transmitted to Poland, and DTEK plans that it is based on the discharge
standards of the EU or less, such as not only emission standards Ukrainian.by reducing contaminant concentration
in the exhaust gas..
4-10
Table 4-3 Target Values of Pollutant Concentration in Exhaust Gas in This Project
Pollutant Unit
Emission Standard Values in Ukraine EU Emission
Standard Values
（>300MW）
IFC /WB EHS Guidelines (Thermal
Power Plant:2008)
New Units (100MW and
over)
Regulation from 2016/1/1 for Existing Units
(applied to the generation capacity of Unit No. 5-8)
Solid Fuel, 600ＭＷ>，Non-degraded airshed
SOx mg/Nm3 200 400-2,000
(100～≦500MW) 150 850
NOx mg/Nm3 200 600
(≦500MW) 200 510
PM mg/ Nm3 30 100
(<500MW) 10 50
*: standard value is dry gas base, 0℃, 1 atm, O2 6% equivalent.
(Source: prepared by the Study Team)
2) Atmospheric Diffusion Estimation of Air Pollutants
The air diffusion estimation surrounding area is conducted to predict the environmental impact of the air
pollutants emitted from the power plant. The calculation was conducted on 1hour value and 24 hour value of SO2,
NO2, and PM10 to confirm the compliance with the respective environmental standards of Ukraine, EU and the
IFC/WB EHS Guideline.
The ground concentrations of air pollutants are estimated for two cases; in the operation of the existing units Nos.
5-8 and in the operation of the planned units in future. In the operation of new unit, it is estimated for three cases;
all existing units and new unit (case 1) ,the existing units Nos. 7-8 and new unit (case 2; the existing units Nos.
5-6 are abandoned.).and new unit only (case 3; the existing units Nos. 5-8 are abandoned due to very old.)
a) Calculation Formula
It is relatively flat surrounding the project site, and the ground concentrations of air pollutants are predicted using
the following Gaussian diffusion model which is used commonly in Western countries and Japan.
6
2z
2
2z
2
2z
2
zy
P 102σ
(z＋He)－＋exp
2σ
(z－He)－exp
2σ
ｙ－・exp
Ｕσ2πσ
Ｑz)＝y,Ｃ(x,
Ｃ : Ground concentration at a point R (m) below the downwind axis
Ｑｐ: Emission volume (g/s)
σｙ: Parameter in the horizontal direction (m)
σｚ: Parameter in the vertical direction (m)
ｕ: Wind speed (m/s)
Ｒ: Horizontal distance between emission source and calculated point (m)
ｚ: Ground height
Ｈe: Effective stack height (m)
4-11
Ｈe＝H+ΔＨ
H: Stack height (m)
ΔＨ: Stack elevation height (m): CONCAWE formula
ΔＨ＝ 0.175 ＱＨ１/２ｕ－３/４
ΔＨ: Emission elevation height (m)
ＱＨ: Exhaust heat (cal/s)
ｕ: Wind speed at the top of stack (m/s)
ＱＨ ＝ρ・Ｑ・Ｃp・ ΔＴ
ρ: Emission gas density at 0 ℃ (cal/s) (1.293×10３g/m３)
Ｑ: Amount of exhaust gas per unit time (Nm3/s）
Ｃp: Constant pressure specific heat (0.24cal/Ｋ/g)
ΔＴ: Difference between emission gas temperature and atmospheric temperature (K)
Figure 4-6 Gaussian Diffusion Model Diagram
(Source: Lecture of Air Environment Prediction, Shinichi Okamoto, 2001)
b) Calculation Conditions
1 hour value and 24 hours value were calculated. 24 hours value is calculated under the condition that wind
direction does not change in 24 hours, and considering that wind direction varies with time under natural
condition and so does the diffusion direction, the calculated concentration is higher than the actual diffusion.
c) Meteorological Conditions
The ground concentration of the pollutants discharged from the stack heavily depends on the diffusion
parameter for each of the wind speed and atmospheric stability, as shown in the aforementioned calculation
formula. Calculation simulation is conducted under the conditions shown in Table 4-4 based on the stability
EEffffeeccttiivvee eemmiissssiioonn
ssttaacckk hheeiigghhtt
pplluummee
ssttaacckk
（（00,,00,,00））
WWiinndd
σσyy
DDiiffffuussiioonn ppaarraammeetteerr
σσｚｚ
DDiiffffuussiioonn ppaarraammeetteerr
AAssssuummeedd oouuttlleett ooff
EEmmiissssiioonn ggaass
4-12
and wind speed indicated in the atmospheric stability classification of Pasquill. From the atmospheric
stability indicated in the atmospheric stability classification of Pasquill, the normal meteorological condition
is selected air stability B to D based on the following reasons.
・ Air stability A is applicable to the emission source near the ground level, but the condition at the stack
height of 100m is less stable than on the ground level.
・ In Air stability E and F, ground concentration tends to be much lower compared to other air stability
condition in a flat geography.
Table 4-4 (1) Setting Conditions for Stability and Wind Speed
Stability Wind speed conditions at ground level (m/s)
Unstable B 1.0, 2.0, 3.0, 4.0
Neutral C 2.0, 3.0, 4.0,6.0,10.0
D 1.0, 2.0, 3.0, 4.0, 6.0,10.0
Table 4-4 (2) Pasquill Stability Categories
Wind speed at ground level
U (m/s)
Daytime Nighttime (rate of solar radiation = 0)
Rate of solar radiation Q (unit 0.01 kWm-2) 60 < Q 30 – 59 15 - 29 1 - 14
U < 2.0 A A-B B D F 2.0 - 2.9 A-B B C D E 3.0 - 3.9 B B-C C D D 4.0 - 5.9 C C-D D D D 6.0 < U C D D D D
(Source: Lecture of Air Environment Prediction, Shinichi Okamoto, 2001)
d) Exhaust Emission Conditions
The data on the amount of emission of pollutant from the existing units Nos.5-8 has not obtained. Therefore, the
amounts of gas emission and pollutants are calculated from the ratio of fuel use (100:94) and power generation
ratio (600:100 or 600:150) per unit generation amount of the existing and the new unit, based on the value of
exhaust gas specification at the USC boiler outlet calculated from characteristics of typical coal used in this
project. As the existing boiler is 50-60 years old and the document of data on the emission amount etc. is not
available, the re-examination of the monitoring data of the power plant is necessary.
Table 4-5 describes the exhaust gas flow, emission gas temperature, stack height, and emission amount of the
respective pollutant used for calculation. The calculation is conducted on the assumption that SOx, NOx and dust
are entirely converted into sulfur dioxide, nitrogen dioxide and suspended particulate matter (PM10). Stack height
is set to 200m so that stack height 2.5 times higher than the surrounding building (boiler building) is assured to
avoid the influence of such building to smoke diffusion.
4-13
Table 4-5 Exhaust Emission Data Used for the Simulation
Item Unit
Existing Units New Unit
Unit 5 Unit 6 Unit 7 Unit 8 Unit 9
Reference
(boiler
outlet)
Power Generation MW 100 100 150 150 600 600
Exhaust Gas Flow (wet) x1,000Nm3/h 338 338 507 507 1,905 1,905
Exhaust Gas Flow (dry) x1,000Nm3/h 312 312 468 468 1,760 1,760
Exhaust Gas Temperature °C 140 140 140 140 95 140
Exhaust Gas Velocity m/s 6.6 10.0 23 -
Stack Height m 105 120 200 -
Stack Inner Diameter ｍ 6 6 6 -
Sulfur Dioxide (SO2) emission
concentration: dry-gas base
concentration (*26% equivalent)
mg/Nm3 3,132
（2.780）
3,132
（2.780）
3,132
（2.780）
3,132
（2.780）
169
（150）
3,132
（2.780）
Nitrogen Dioxide (NO2) emission
concentration: dry-gas base
concentration (*26% equivalent)
mg/Nm3 563
（500）
563
（500）
563
（500）
563
（500）
225
（200）
563
（500）
Particulate matter (PM): dry-gas
base concentration (*26%
equivalent)
mg/Nm3 112
（100）
112
（100）
112
（100）
112
（100）
11
（10）
38,870
（34.500）
Sulfur Dioxide (SO2) emission rate kg/ｈ 977 977 1,466 1,466 297 5,512
Nitrogen Dioxide (NO2) emission
rate kg/ｈ 176 176 263 263 396 991
Suspended particulate matter
emission rate (PM) kg/ｈ 35 35 52 52 20 68,411
Notes:
1) The data for PM emission concentration and emission rate is calculated from the emission standard (100 mg/Nm3) of the existing
units in Ukraine, since dust collection efficiency is not known.
2) The emission concentrations and emission rates of SOx, NOx and PM for the new boiler were set to the value compliant to the EU
emission standards.
3) O2 concentration of dry gas is set to 4.1%.
4) The exhaust gas temperature for the new boiler is set with consideration to raising up of temperature again in order to enhance
diffusion effect, since the temperature decreases by the desulfurization system.
(Source: prepared by the Study Team
e) Calculation Results
First the ground concentrations of SO2 (1 hour value) for the existing Units 5-6, Units 7-8 and the new Unit 9 are
simulated, because the emission amount of SOx is large. The results are shown in Figure 4-7. The emission
4-14
concentrations from the existing Units 5-6, Units 7-8 and the new Unit 9 become highest under the condition of
stability B and ground wind speed of 1m/s.
Under any meteorological conditions, the maximum ground concentrations for the existing Units 5-6 and Units
7-8 are more than 10 times higher than the new Unit 9. In certain points, the pollutants in the ambient air are
assumed to already exceed the environmental quality standards for air at this time. In the future operation period
of the new Unit 9, ambient air quality surrounding the project site should be improved to meet the environmental
quality standards for air.
4-15
Figure 4-7(1) Predicted Ground Concentration of SOx for Each Stability/Wind Speed (Existing Units 5-6)
SOx-StabilityB
0
40
80
120
160
200
0 5000 10000 15000 20000 25000 30000
m
μg/
m3
1
2
3
4
SOx-StabilityC
0
40
80
120
160
200
0 5000 10000 15000 20000 25000 30000
m
μg/m3
2
3
4
6
10
SOx-StabilityD
0
40
80
120
160
200
0 10000 20000 30000 40000 50000
m
μg/
m3
1
2
3
4
6
10
(Source: prepared by the Study Team)
Wind speed
(m/s)
Wind speed
(m/s)
Wind speed
(m/s)
4-16
Figure 4-7(2) Predicted Ground Concentration of SOx for Each Stability/Wind Speed (Existing Unit 7-8)
SOx-StabilityB
0
50
100
150
200
250
0 5000 10000 15000 20000 25000 30000
m
μg/m3
1
2
3
4
SOx-StabilityC
0
50
100
150
200
250
0 5000 10000 15000 20000 25000 30000
m
μg/m3
2
3
4
6
10
SOx-StabilityD
0
50
100
150
200
250
0 10000 20000 30000 40000 50000
m
μg/
m3
1
2
3
4
6
10
(Source: prepared by the Study Team)
Wind speed
(m/s)
Wind speed
(m/s)
Wind speed
(m/s)
4-17
Figure 4-7(3) Predicted Ground Concentration of SOx for Each Stability/Wind Speed (New Unit 9)
SOx-StabilityB
0
5
10
15
20
0 5000 10000 15000 20000 25000 30000
m
μg/m3
1
2
3
4
SOx-StabilityC
0
5
10
15
20
0 5000 10000 15000 20000 25000 30000
m
μg/m3
2
3
4
6
10
SOx-StabilityD
0
5
10
15
20
0 10000 20000 30000 40000 50000
m
μg/
m3
1
2
3
4
6
10
(Source: prepared by the Study Team)
Wind speed
(m/s)
Wind speed
(m/s)
Wind speed
(m/s)
4-18
Next, the possibility and extent of the future improvement of ambient air quality by stopping or decommissioning
the existing units is considered. Regarding the impact of the whole power plant, ground concentrations of
one-hour value and 24-hour value are simulated for following 4 cases. The calculations are conducted under the
condition of stability B (unstable) where ground concentrations are the maximum.
・ Current conditions: Existing Units 5-6 and Units 7-8 are in operation.
・ Future - Case 1: Existing Units 5-6, Units 7-8 and New Unit 9 are in operation.
・ Future - Case 2: Existing Units 5-6 are stopped or decommissioned; Units 7-8 and New Unit 9 are in
operation.
・ Future - Case 3: Existing Units 5-6 and Units 7-8 are stopped or decommissioned, and New Unit 9 are in
operation.
e)-1 SO2 (Table 4-6, Figure 4-8)
In the current status, the existing Units 5-8 are not equipped with desulfurization system. Exhaust gas is emitted
into the environment with the concentration exceeding the environmental quality standards of Ukraine, EU and
IFC/WB. In this context, the maximum ground concentration of SO2 emitted from the existing units is 408μg/m3
for 1-hour value and 216μg/m3 for 24-hour value, indicating that both 1-hour and 24-hour values exceeds the EU
standard by only impact of the power plant.
In Case 1 where the new Unit 9 will be installed, concentration slightly increases (one-hour value: 422μg/m3,
24-hour value: 223μg/m3). Both 1-hour and 24-hour values exceeds the EU standard by only impact of the power
plant, similar to the current status.
In Case 2 where the existing Units 5-6 will be stopped or decommissioned, and the existing Units 7-8 and the new
Unit 9 is in operation, the impact of the power plant decreases (one-hour value: 229μg/m3, 24-hour value:
121μg/m3).
In Case 3 where the existing Units 5-6 and 7-8 will be stopped or decommissioned, and the new Unit 9 is in
operation, the impact of the power plant largely decreases, the maximum ground concentration is 15.1μg/m3 for
1-hour value and 8.0μg/m3 for 24-hour value, double-digit lower than other 24-hour values, satisfies the EU
standard and the Ukrainian standard.
e)-2 NO2 (Table 4-6, Figure 4-9)
In the current status, the existing Units 5-8 are not equipped with denitration system. Exhaust gas is emitted into
the environment with the concentration exceeding the environmental quality standards of Ukraine, EU and
IFC/WB. In this context, the maximum ground concentration of NO2 emitted from the existing units is not as high
as in case of SO2. One-hour value of 73.3μg/m3 and 24-hour value of 38.8μg/m3, which indicates that the impact
of the power plant, satisfies the EU standard for one-hour value and the Ukrainian standard for 24-hour value.
4-19
In Case 1 where the new Unit 9 will be installed, the concentration slightly increases up to one-hour value of
91.9μg/m3 and 24-hour value of 48.6g/m3, indicating that the impact of the power plant satisfies the EU standard
for one-hour value but exceeds the Ukraine standard for 24-hour value, as is the case in the current status.
In Case 2 in which the existing Units 5-6 will be stopped or decommissioned, the impact of the power plant
decreases (one-hour value: 58.0μg/m3, 24-hour value: 30.7μg/m3).
In Case 3 where the existing Units 5-6 and 7-8 will be stopped or decommissioned, the impact of the power plant
largely decreases (one-hour value: 20.2μg/m3, 24-hour value: 10.7μg/m3), meeting both EU and Ukrainian
standards.
e)-3 PM10 (Table 4-6, Figure 4-10)
In the current status, the existing Units 5-8 are equipped with dust collection system to improve concentration of
exhaust gas to meet the environmental quality standards of Ukraine, IFC/WB and EU. Thus, the maximum ground
concentration of PM10 from the existing units is 14.5μg/m3 in one-hour value and 7.7μg/m3 in 24-hour value,
indicating that the impact of the power plant meets the EU standard.
In Case 1 where the new Unit 9 will be installed, the concentration rises only slightly, 15.5μg/m3 for one-hour
value and 8.2μg/m3 for 24-hour value, indicating that the impact of the power plant well meets the EU standard.
In Case 2 in which the existing Units 5-6 will be stopped or decommissioned, the impact of the power plant
decreases (one-hour value: 8.6μg/m3, 24-hour value: 4.5μg/m3).
In Case 3 where the existing Units 5-6 and Units 7-8 will be stopped or decommissioned, the impact of the power
plant farther decreases (one-hour value: 1.0μg/m3, 24-hour value: 0.5μg/m3), well meeting EU standards.
4-20
Table 4-6 Maximum Ground Concentration Prediction Results (Stability B (unstable)) (unit: μg/m3)
Pollutant
Measured Time
Current status Future Case 1 Future Case 2 Future Case 3 Environmental Quality Standard
Maximum
Ground Concentration
Distance
(km)
Maximum
Ground Concentration
Distance
(km)
Maximum
Ground Concentration
Distance
(km)
Maximum
Ground Concentration
Distance
(km)
Ukraine
EU
IFC/ＷＢ EHS
Guideline（general）
Japan
SO2
１hr 408 3.1 422 3.2 229 3.5 15.1 3.9 500 （20 min）
350 500
（10 min） 262
24hr 216 3.2 223 3.2 121 3.5 8.0 3.9 50 125 125
(Interim target 1)
105
NO2
１hr 73.3 3.2 91.9 3.3 58.0 3.6 20.2 3.9 200 （20 min）
200 200
（guideline）
-
24hr 38.8 3.2 48.6 3.3 30.7 3.6 10.7 3.9 40 - - 113
PM1
0
１hr 14.5 3.2 15.5 3.2 8.6 3.5 1.0 3.9 - - - 200
24hr 7.7 3.2 8.2 3.2 4.5 3.5 0.5 3.9 - 50 150
(Interim target 1)
100
(Source: prepared by the Study Team)
4-21
Figure 4-8 (1) Ground Concentration Prediction Results for SO2 (Current Status: Existing Units 5-8)
Figure 4-8 (2) Ground Concentration Prediction Results for SO2
(Future Case 1: Existing Units 5-8 and New Unit 9)
(Source: prepared by the Study Team)
Wind Speed (m/s)
Stability B
Stability B
Wind Speed (m/s)
4-22
Figure 4-8 (3) Ground Concentration Prediction Results for SO2
(Future Case 2: Existing Units 7-8 and New Unit 9)
Figure 4-8 (4) Ground Concentration Prediction Results for SO2 (Future Case 3: New Unit 9)
(Source: prepared by the Study Team)
Wind Speed (m/s)
Wind Speed (m/s)
Stability B
Stability B
4-23
Figure 4-9 (1) Ground Concentration Prediction Results for NO2 (Current Status: Existing Units 5-8)
Figure 4-9 (2) Ground Concentration Prediction Results for NO2
(Future Case 1: Existing Units 5-8 and New Unit 9)
(Source: prepared by the Study Team)
Wind Speed (m/s)
Wind Speed (m/s)
Stability B
Stability B
4-24
Figure 4-9 (3) Ground Concentration Prediction Results for NO2
(Future Case 2: Existing Units 7-8 and New Unit 9)
Figure 4-9 (4) Ground Concentration Prediction Results for NO2 (Future Case 3: New Unit 9)
(Source: prepared by the Study Team)
Wind Speed (m/s)
Wind Speed (m/s)
Stability B
Stability B
4-25
Figure 4-10 (1) Ground Concentration Prediction Results for PM10 (Current Status: Existing Units 5-8)
Figure 4-10 (2) Ground Concentration Prediction Results for PM10
(Future Case 1: Existing Units 5-8 and New Unit 9)
(Source: prepared by the Study Team)
Wind Speed (m/s)
Wind Speed (m/s)
Stability B
Stability B
4-26
Figure 4-10 (3) Ground Concentration Prediction Results for PM10
(Future Case 2: Existing Units 7-8 and New Unit 9)
Figure 4-10 (4) Ground Concentration Prediction Results for PM10 (Future Case 3: New Unit 9)
(Source: prepared by the Study Team)
Wind Speed (m/s)
Wind Speed (m/s)
Stability B
Stability B
4-27
(3) Environmental and Social Impacts of the Project Implementation
1) JICA Guidelines
Japan International Cooperation Agency (JICA) proclaimed the new "JICA guidelines for environmental and
social considerations" (herein after "the new Guidelines") on April, 1st, 2010.
The objectives of the guidelines are to encourage Project proponents etc. to have appropriate consideration for
environmental and social impacts, as well as to ensure that JICA’s support for and examination of environmental
and social considerations are conducted accordingly. The guidelines outline JICA’s responsibilities and
procedures, along with its requirements for project proponents etc., in order to facilitate the achievement of these
objectives. In this guidelines, JICA requests “that Project proponents etc. fill in the screening form; the
information in this form will be a reference for the categorization of proposed projects.”, and “JICA conducts an
environmental review in accordance with the project category, and refers to the corresponding environmental
checklists for each sector when conducting that review as appropriate.”
2) Review Results of Environmental and Social Consideration
The project is to consider the expansion of the existing Dobrotvirska Power Plant. The environmental and social
consideration items, which are necessary at the next stage after this survey, are reviewed extensively using JICA
Environmental Checklist “2. Thermal Power Plant). Table 4-7 shows the review results of the environmental
checklist items at present. This checklist should be updated after the Environmental Impact Assessment（EIA） by
Ukraine in the next stage.
Table 4-7 JICA Environmental Checklist (2. Thermal Power Plant)
Category
Environmental Item
Main Check Items Major Impact
Impact Level (●: large, ○: small, ×: none)
Mitigation Measure to be Conducted and Necessary Consideration
1 Perm
its and Explanation
(1) EIA and Environmental Permits
(a) Have environmental assessment report (EIA reports) been officially completed?
－ － This project relates to the alteration of the initial plan (225MW×3 units) that has been approved in 1990’s into 600MW×1unit. The EIA will be re-implemented according to the regulations of Ukraine.
(b) Have EIA reports been approved by authorities of the host country’s government?
－ － The approval of the State authority will be acquired after the implementation of the EIA mentioned above.
(c) Have EIA reports been unconditionally approved? If conditions are imposed on the approval of EIA reports, are the conditions satisfied?
－ － The conditions will be considered in the course of the EIA procedure by an authority.
(d) In addition to the above approvals, have other required environmental permits been obtained from the appropriate regulatory authorities of the host country’s government?
－ － The reacquisition of necessary approval and permits may be needed according to the change of the initial project plan.
(2) Explanation to the local stakeholders
(a) Are contents of the project and the potential impacts adequately explained to the public based on appropriate procedures, including information disclosure? Is understanding obtained from the public?
－ － The re-implementation of the EIA is needed according to the laws and regulations of Ukraine. The stakeholders explanation meeting will be held during the EIA process and the local people’s opinions will be appropriately collected.
4-28
Category
Environmental Item
Main Check Items Major Impact
Impact Level (●: large, ○: small, ×: none)
Mitigation Measure to be Conducted and Necessary Consideration
(b) Are proper responses made to comments from the public and regulatory authorities?
－ － The comments from the public will be appropriately corresponded.
(3) Consideration of the alternatives
(a) Are plural alternatives of the project plan considered (including the environmental social issues )?
－ － The alternatives of generation method etc. will be considered according to the EIA procedure based on the laws and regulations of Ukraine, including environmental and social issues.
2 Pollution P
revention Measures
(1) Air quality
(a) Do air pollutants, such as sulfur oxides (SOx), nitrogen oxides (NOx), and soot and dust emitted by power plant operations comply with the country’s emission standards? Is there a possibility that air pollutants emitted from the project will cause areas that do not comply with the country’s ambient air quality standards?
・Sox, NOｘ and dust are generated from the coal-fired power plant ・Cumulative impact of the existing units
● ●
・It is necessary to introduce flue-gas desulfurization/denitration system in order to meet the emission standard of Ukraine applied to the installation of a new unit, emission standards of EU and IFC/WB EHS guidelines. ・ Quantitative survey, prediction, assessment in the EIA, including cumulative impact
(b) In the case of coal-fired power plants, is there a possibility that fugitive coal dust from coal piles, coal handling facilities, and dust from coal ash disposal sites will cause air pollution? Are adequate measures taken to prevent the air pollution?
・Flying coal dust ・Flying coal ash
○ ○
Implementation of mitigation measures currently used at the existing units (water sprinkling at the coal storage site, transportation of coal to the coal disposal site through slurry method)
(2) Water quality
(a) Do effluents including thermal effluents from the power plant comply with the country’s effluent standards? Is there a possibility that the effluents from the project will cause areas that do not comply with the country’s ambient water quality standards or cause a significant temperature rise in the receiving waters?
・Thermal effluent discharge ・Plant effluent discharge ・Cumulative impact of the existing units
● ○ ●
・ Installation of wastewater treatment plant to meet standards of EU, IFC/WB EHS guidelines for effluent (consideration of the capacity of the existing units, installation of additional treatment plant) ・ Quantitative survey, prediction, assessment in the EIA, including cumulative impact
(b) In the case of coal-fired power plants, do leachates from coal piles and coal ash disposal sites comply with the country’s effluent standards?
・Leachate from the coal storage site ・Leachate from ash disposal site
○ ○
・ Installation of wastewater treatment plant to meet standards of EU, IFC/WB EHS guidelines for effluent (consideration of the capacity of the existing units, installation of additional treatment plant) ・Preventive measures against leachate (check the permeability of the layer)
(c) Are adequate measures taken to prevent contamination of surface water, soil, groundwater, and seawater by the effluents?
Same as (a), (b) Same as (a), (b)
Same as (a), (b)
(3) Waste
(a) Are wastes (such as waste oils, and waste chemical agents), coal ash, and by-product gypsum from flue gas desulfurization generated by the power plant operations properly treated and disposed of in accordance with the country’s standards?
・Generation of coal ash ・Generation of plaster from desulfurization system ・Generation of waste oil and sludge
● ○ ○
・Confirmation of the capacity of the coal ash disposal site ・Consideration for reuse of coal ash and plaster ・ Continue implementation of waste disposal method used for the existing units
4-29
Category
Environmental Item
Main Check Items Major Impact
Impact Level (●: large, ○: small, ×: none)
Mitigation Measure to be Conducted and Necessary Consideration
(4) Noise and Vibration
(a) Do noise and vibrations generated by the power plant operations comply with the country’s ambient standards, and occupational health and safety standards?
・ Noise from the machines and equipment ・ Cumulative impact of the existing units
○ ・Continuous implementation of noise mitigation method used for the existing units ・ Quantitative survey, prediction, assessment in the EIA, including cumulative impact
(5) Subsidence
(a) In the case of extraction of a large volume of groundwater, is there a possibility that the extraction of groundwater will cause subsidence?
× × Water used for the project is supplied from river water and not from ground water. Therefore, subsidence will not occur.
(6) Odor
(a) Are there any odor sources? Are adequate odor control measures taken?
Generation of residual ammonia
○ Appropriate injection of ammonia used in the flue gas denitration system
3 Natural E
nvironment
(1) Protected Areas
(a) Is the project site located in protected areas designated by the country’s laws or international treaties and conventions? Is there a possibility that the project will affect the protected areas?
Power generation equipment
× The project relates to the expansion of the existing power plant. The project site is not located within the protected area, and is distant from the nearest protected area.
(2) Ecosystem and biota
(a) Does the project site encompass primeval forests, tropical rain forests, ecologically valuable habitats (e.g., coral reefs, mangroves, or tidal flats)?
Power generation equipment
× The project relates to the expansion of the existing power plant, and there is no a natural forest within the site.
(b) Does the project site encompass the protected habitats of endangered species designated by the country’s laws or international treaties and conventions?
Power generation equipment
× The project relates to the expansion of the existing power plant, and the site does not include habitat of precious species of fauna and flora.
(c) If significant ecological impacts are anticipated, are adequate environmental protection measures taken to reduce the impacts on ecosystem?
Power generation equipment
○ The project relates to the expansion of the existing power plant. The project site is already developed and is not rich with flora and fauna.
(d) Is there a possibility that the amount of water (e.g., surface water, groundwater) used by the project will adversely affect aquatic environments, such as rivers? Are adequate measures taken to reduce the impacts on aquatic environments, such as aquatic organisms?
Acquisition of cooling water and plant water
○ ・Reconsideration of the acquisition of water amount required (decreased quantity of cooling water and increased quantity of denitrition) ・ Field and document surveys concerning organisms in rivers during the EIA process
(e) Is there a possibility that discharge of thermal effluents, intake of a large volume of cooling water or discharge of leachates will adversely affect the ecosystem of surrounding water areas?
・ Thermal effluent discharge ・ Discharge of wastewater from the plant ・ Cumulative impact of the existing units
● ○ ●
・ Installation of wastewater treatment plant to meet standards of EU, IFC/WB EHS guidelines for effluent (consideration of the capacity of the existing units, installation of additional treatment plant) ・ Quantitative survey, prediction, assessment in the EIA, including cumulative impact
4-30
Category
Environmental Item
Main Check Items Major Impact
Impact Level (●: large, ○: small, ×: none)
Mitigation Measure to be Conducted and Necessary Consideration
4 Social Environm
ent
(1) Resettlement
(a) Is involuntary resettlement caused by project implementation? If involuntary resettlement is caused, are efforts made to minimize the impacts caused by the resettlement?
Land acquisition
× The project relates to the expansion of the existing power plant. The coal ash disposal site has already been installed, and further land acquisition and resettlement is not necessary.
(b) Is adequate explanation on relocation and compensation given to affected persons prior to resettlement?
ditto ditto Ditto
(c) Is the resettlement plan, including proper compensation, restoration of livelihoods and living standards developed based on socioeconomic studies on resettlement?
ditto ditto Ditto
(d) Will compensation paid before resettlement?
ditto ditto Ditto
(e) Is the compensation policy established in a document?
ditto ditto Ditto
(f) Does the resettlement plan pay particular attention to vulnerable groups or persons, including women, children, the elderly, people below the poverty line, ethnic minorities, and indigenous peoples?
ditto ditto Ditto
(g) Are agreements with the affected persons obtained prior to resettlement?
ditto ditto Ditto
(h) Is the organizational framework established to properly implement resettlement? Are the capacity and budget secured to implement the plan?
ditto ditto Ditto
(i) Is a plan developed to monitor the impacts of resettlement?
ditto ditto Ditto
(j) Is a grievance system developed?
ditto ditto Ditto
(2) Living and Livelihood
(a) Is there a possibility that the project will adversely affect the living conditions of inhabitants? Are adequate measures considered to reduce the impacts, if necessary?
Inflow of workers and increased economic activity
○ Enhancement of local activity by promotion of employment of local people and active utilization of the local companies.
(b) Is sufficient infrastructure (e.g., hospitals, schools, roads) available for the project implementation? If existing infrastructure is insufficient, is a plan developed to construct new infrastructure or improve existing infrastructure?
Inflow of workers and development of infrastructure
× The infrastructures in the town for the workers (school, hospital), reservoir, access road are already developed in the surrounding area of the power plant, since the exciting power plant had already constructed.
4-31
Category
Environmental Item
Main Check Items Major Impact
Impact Level (●: large, ○: small, ×: none)
Mitigation Measure to be Conducted and Necessary Consideration
(c) Is there a possibility that large vehicle traffic associated with the project will affect road traffic in the surrounding areas? Are adequate measures considered to reduce the impacts on traffic, if necessary?
Increased traffic caused by construction vehicles
○ Prior notification of construction schedule, implementation of safety measures for vehicle traffics
(d) Is there a possibility that diseases (including communicable diseases, such as HIV) will be introduced due to immigration of workers associated with the project? Are adequate considerations given to public health, if necessary?
Increased traffic caused by construction vehicles
○ Prior notification of construction schedule, implementation of accident prevention measures for vehicle traffics
(e) Is there a possibility that the amount of water used (e.g., surface water, groundwater) and discharge of thermal effluents by the project will adversely affect existing water uses and uses of water areas (especially fishing)?
・ Water intake for cooling water and plant water ・ Thermal effluent discharge ・ Discharge of wastewater from the plant
○ ・Reconsideration of the amount of water needed (reduction of cooling water use and increase of desulfurization system water) ・Survey of fishing operation status
4 Social Environm
ent
(3) Heritage
(a) Is there a possibility that the project will damage the local archeological, historical, cultural, and religious heritage sites? Are adequate measures considered to protect these sites in accordance with the country’s laws?
Installation of power generation facility
× The project relates to the expansion of the existing power plant. There are no archaeological, historical, cultural, religious heritage sites within the project site.
(4) Landscape
(a) Is there a possibility that the project will adversely affect the local landscape? Are necessary measures taken?
Installation of power generation facility
× There are agricultural land and town around the project site, but no tourist site.
(5) Ethnic Minorities and Indigenous Peoples
(a) Are considerations given to reduce the impacts on culture and lifestyle of ethnic minorities and indigenous peoples?
Land acquisition
× The town for project workers has already been developed, and impact on the life of ethnic minorities and indigenous people is not predicted. The project relates to the expansion of the existing power plant and coal ash disposal site has already been developed.
(b) Does the project comply with the country’s laws for rights of ethnic minorities and indigenous peoples?
ditto ditto Ditto
(5) working conditions(including working safety)
(a) Is the project proponent not violating any laws and ordinances associated with the working conditions of the country which the project proponent should observe in the project?
Employment of workers
○ Laws and regulations concerning working environment should be checked.
(b) Are tangible safety considerations in place for individuals involved in the project, such as the installation of safety equipment which prevents industrial accidents, and management of hazardous materials?
Employment of workers
○ Fire preventive equipment and safety gear should be checked, including the equipment of the existing units.
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Category
Environmental Item
Main Check Items Major Impact
Impact Level (●: large, ○: small, ×: none)
Mitigation Measure to be Conducted and Necessary Consideration
(c) Are intangible measures being planned and implemented for individuals involved in the project, such as the establishment of a safety and health program, and safety training (including traffic safety and public sanitation) for workers etc.?
Employment of workers
○ Safety management, safety education, public sanitation, emergency management plan should be checked, including the equipment of the existing units.
(d) Are appropriate measures being taken to ensure that security guards involved in the project do not violate safety of other individuals involved, or local residents?
Employment of security personnel
○ Security personnel are placed at the entrance of the site at the existing power plant.
5 Others
(1) Impacts during construction
(a) Are adequate measures considered to reduce impacts during construction (e.g., noise, vibrations, turbid water, dust, exhaust gases, and wastes)?
・ Generation of dust ・ Generation of noise ・ Generation of turbid water ・ Generation of waste
○ The following mitigation measures should be taken in consideration of the nearby residential area. ・The rear deck of vehicles transporting sand and soil should be covered, and construction site and traffic road should be watered. ・Material-transportation vehicles should be kept in good condition. ・Piling activity should be limited to daytime to the possible extent. ・ Installation of drainage fitted to the geography and capacity prior to construction work. ・Pollutant should be appropriately managed similar to the existing units.
(b) If construction activities adversely affect the natural environment (ecosystem), are adequate measures considered to reduce impacts?
Land development
○ The project relates to the expansion of the existing power plant. The project site is already developed and is not rich with flora and fauna.
(c) If construction activities adversely affect the social environment, are adequate measures considered to reduce impacts?
・ Inflow of workers and increased economic activity ・ Increased traffic caused by construction vehicles
○ ○
・ Enhancement of local activity by promotion of employment of local people and active utilization of the local companies ・ Prior notification of construction schedule, implementation of accident prevention measures for vehicle traffics
(2) Accident prevention
(a) In the case of coal-fired power plants, are adequate measures planned to prevent spontaneous combustion at the coal piles? (e.g., sprinkler systems).
Combustion at the coal storage
The coal storage site should be equipped with a water sprinkler to prevent spontaneous fire, similar to the existing units.
(3) Monitoring
(a) Does the proponent develop and implement monitoring program for the environmental items described above that are considered to have potential impacts?
－ － Regular monitoring of exhaust gas, effluent, ambient air quality, water quality, and noise according to the monitoring plan developed during the EIA process.
(b) Are the items, methods and frequencies included in the monitoring program judged to be appropriate?
－ － Implementation of appropriate monitoring items, method and frequency in cooperation with the regulatory authority according to the monitoring plan developed during the EIA process.
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Category
Environmental Item
Main Check Items Major Impact
Impact Level (●: large, ○: small, ×: none)
Mitigation Measure to be Conducted and Necessary Consideration
(c) Does the proponent establish an adequate monitoring framework (organization, personnel, equipment, and adequate budget to sustain the monitoring framework)?
－ － Development of monitoring organization according to the environmental management plan
(d) Are any regulatory requirements pertaining to the monitoring report system identified, such as the format and frequency of reports from the proponent to the regulatory authorities?
－ － Report the results to the regulatory authority.
6 Note
Reference to Checklist of Other Sectors
(a) Where necessary, pertinent items described in the Power Transmission and Distribution Lines checklist should also be checked (e.g., projects including installation of electric transmission lines and/or electric distribution facilities).
－ － The plan for transmission line will be considered.
(b) Where necessary, pertinent items described in the Ports and Harbors checklist should also be checked (e.g., projects including construction of port and harbor facilities).
－ － Railways will be used for transportation. The installation of port facility such as jetty is not planned.
Note on Using Environmental Checklist
(a) If necessary, the impacts to transboundary or global issues should be confirmed (e.g., the project includes factors that may cause problems, such as transboundary waste treatment, acid rain, destruction of the ozone layer, and global warming).
－ － High-efficiency USC (ultra supercritical) boiler is used to reduce CO2 emission per power generation compared to the existing units.
(Source: prepared by the Study Team)
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(4) Overview of the Laws and Regulations concerning Environmental-Social Considerations of the Host Country and the Measures needed for Clearing
1) Environmental Administration in Ukraine
In February 2002, MENR (Ministry of Environment and Natural Resources) was established in Ukraine as the
national governmental organization responsible for environmental administration, which was later reorganized
into MEP (Ministry of Environmental Protection) and State Committee for National Resources in September 2003.
MEP is responsible for the development and implementation of national regulations and policies concerning
environmental protection.
The Ministry consists of five departments supervising the activities of five inspectorates (ecological and forest at
the national level, and three sea inspectorates) with a total of approximately 4,000 staffs. The Ministry also
oversees the work of three State Services (Geological, Natural Reserves, and Geodesy and Cartography), five
research institutes and six state enterprises. Figure 4-11 describes the structure of the subordinated agencies of the
Ministry for Environmental Protection.
Figure 4-11 Structure of the Subordinated Agencies of the Ministry for Environmental Protection
(Source: UNITED NATION, ENVIRONMENTAL PERFORMANCE REVIEWS UKRAINE, 2007)
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2) Environmental Laws and Regulations in Ukraine
a) Environmental Protection Law
Over the first decade since the time Ukraine was declared independent in 1991, a system of ecological regulations
was being built in Ukraine. Of the principal legal documents referring to environmental protection, around 80.
The Environmental Protection Law approved in 1991 constitutes the main environmental regulation. It
encompasses a new policy and rules compared to the time of Soviet Union, as can be seen from the description
“Environmental protection, the rational use of natural resources, providing of ecological safety of vital functions
of man are an inalienable condition of permanent economic and social development of Ukraine”.
Other principal laws and regulations are:
・ 1992 Law on the protection of Atmospheric Air(1992, amended in 2001)
・ 1992 Land Code
・ 1993 Law on the Sanitary and Epidemiological Prosperity of Population
・ 1994 Forest Code
・ 1995 Water Code
・ 1995 Law on Environmental Examination
・ 1998 Law on Waste
・ 2001 The Law on Air Protection (Revision)
・ 2002 The procedure for approving investment programs and construction projects and performing complex
state environmental impact assessments (Cabinet of Ministers Resolution No. 483)
・ 2003 The State Construction Norms DBN A.2.2-1-2003 “Structure and content of the documentation for
environmental impact assessment (EIA) in designing and building industrial enterprises, buildings and
structures. Main regulations for design”
・ 2004 The Law on Environmental Audits
The system of the environmental law and regulations in Ukraine is complicated: the United Nation’s
Environmental Performance Review Report pointed out that “it should be more systematically-organized to be
consistent with the regulation system of EC (European Commission) laws of EU”.
b) Law on the Protection of Atmospheric Air
The ambient air quality standards are regulated by State Sanitary rules for Air Protection from Pollution (with
Chemical and Biological Agents) in Human Settlements, the MOH on 09.07.1997 № 201 in Ukraine. 24-hours
average concentration, the maximum allowable concentration, and risk classification are established for 509
materials. The standard values for PM2.5 and PM10 are not established in Ukraine. The standard value for dust is
regulated based on the dust types and the content rate of silicon compounds, not on particle sizes.
Table 4-8 Ambient Air Quality Standards (μg/m3)
items Ukraine1 EU2 IFC3
Maximum 500 － 500（10min）
SO2 One-hour value － 350 －
24-hour value 50 125 125（Target
Value 1）
Maximum 200 － －
NO2 One-hour value － 200 200
24-hour value 40 － －
Annual average － 40 40
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NO Maximum 400 － －
24-hour value 60 － －
PM10 24-hour value － 50 150（Target
Value 1）
Annual average － 40 70（Target Value
1）
PM2.5 24-hour value － － 75（Target Value
1）
Annual average － 25
35（Target Value
1）
1. State sanitary rules for air protection from pollution (with chemical and biological agents) in human
settlements, the MOH on 09.07.1997 № 201
2. Directive 2008/50/EC of the European Parliament and of the Council of 21 May 2008 on Ambient Air
Quality and Cleaner Air for Europe
3. Environmental, Health, and Safety Guidelines, General
(Source: prepared by the Study Team)
The emission standard of hazardous materials from over 50MW thermal power plant is regulated by MEP Order
No. 541 of October 22, 2008 in Ukraine. Table 4-9 and 4-10 indicate the emission standard applied to the existing
unit and the new unit, respectively.
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Table 4-9 Emission Standards for the Existing Units (mg/Nm3)
Item Ukraine1(>50MW)
EU2
(>300MW) IFC3
（Boiler） Before 2015/12/31
After 2016/1/1
Dust 1,000 50(≧500MW) 100(<500MW)
10 50
SO24 400-5,100
2,000 (≦100MW) 400-2,000(100～≦500MW)
400 (>500MW) 150
200-850 (≧600MW)
NOx 400-2,000 600(≦500MW) 200(>500MW)
200 510
CO 250 250 － －
Notes: solid, O26%
1. On adoption of limit values on emission of pollutants from power-generating units with nominal capacity
more than 50MW, MEP Order No. 541 of October 22, 2008
2. Directive 2010/75/EC of the European Parliament and of the Council of 24 November 2010 on industrial
emissions (integrated pollution prevention and control)
3. Environmental, Health, and Safety Guidelines for Thermal Power Plants
4. In case the power plant is operated for 2,000 hours a year until 2015/12/31 and 1,500 hours a year from
2016/1/1, SO2 emission standard of 800 (mg/Nm3) is applied.
(Source: prepared by the Study Team)
Table 4-10 Emission Standards for the new unit (mg/Nm3)
Item Ukraine1
(>100MW) EU2
(>300MW) IFC3
(Boiler)
Dust 30 10 50
SO2 200 150 200-850
(≧600MW) NOx 200 200 510 CO 250 － －
Notes: solid, O26%
1. On adoption of limit values on emission of pollutants from power-generating units with nominal capacity
more than 50MW, MEP Order No. 541 of October 22, 2008
2. Directive 2010/75/EC of the European Parliament and of the Council of 24 November 2010 on industrial
emissions (integrated pollution prevention and control)
3. Environmental, Health, and Safety Guidelines for Thermal Power Plants
(Source: prepared by the Study Team)
c) Water Quality Regulations
In Ukraine, the Environmental Quality Standards for water are established based on the standards of the Soviet
Union period (The Maximum Permissible Concentrations of Hazardous Substances in Water of Water Bodies,
Used for Industrial, Drinking, Cultural and Domestic Water Use (1,345 substances) (4/7/88)). The water quality
standards in Ukraine regulate the safety standard concerning water use, water quality standard for water
area/system and the maximum allowable concentrations, and not the total discharge amount. The maximum
allowable concentrations are usually determined according to the environmental quality standards of the
relevant water system/area by the experts of MEP, etc. Table 4-11 describes the environmental quality standards
for water.
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Table 4-11 Environmental Quality Standards for Water
Parameter Unit Maximum Allowable
Concentration pH － 6.5-8.5 Ammonia mg/l 2.0 NO3 mg/l 45.0 NO2 mg/l 3.3 Arsenic mg/l 0.05 Lead mg/l 0.03 Cr3 mg/l 0.5 Cr6 mg/l 0.05 Cadmium mg/l 0.001 Copper mg/l 1.0 Nickel mg/l 0.1 Mercury mg/l 0.0005 Zinc mg/l 1.0 Fluorides mg/l 1.5 Sulfates mg/l 500.0 Iron mg/l 0.3 PO4 mg/l 3.5 Cobalt mg/l 0.1
(Source: prepared by the Study Team)
d) Noise
The noise standards in Ukraine are established based on the standard values settled in the period of Soviet Union
（DBN360-92 State sanitary regulations for settlement planning and development, 1996）(Table 4-12).
Table 4-12 Noise Standards
Central frequency of the octave-band (Hz) Equivalent sound
level (LAeq) 63 125 250 500 1,000 2,000 4,000 8,000 Day(dB) 75 66 59 54 50 47 47 43 55dB(A)
Night(dB) 67 57 49 44 40 37 37 33 45dB(A)
(Source: State Sanitary Regulations)
e) Natural Environmental Protection
The Government of Ukraine approved “the Strategy for National Environmental Policy in Ukraine to 2020” on
December 21, 2010. A National Action Plan for Environmental Protection in Ukraine for 2011-2015, was
developed during the last half of 2010 for implementing the above Strategy. On December 15, 2010, the Cabinet
of Ministers of Ukraine approved a draft funding agreement "On Support for the Implementation of the Strategy
for the National Environmental Policy of Ukraine."
Ukraine’s key environmental laws and legislated programs on biodiversity conservation and protected areas
include:
・ Environmental Protection Act: The Act that sets up the overall environmental framework for all
environmental activities.
・ Land Code: Ukraine’s land use legislation, it is supposed to ensure “rational land use and protection of
lands,” as well as “environmental security.” The Land Code divides all lands of Ukraine into nine
categories by the purpose of their end use, including four categories especially relevant to biodiversity
conservation, protected areas, forest lands, agricultural lands, and water lands.
・ Protected Areas Act: The main framework to establish classification and effective use of protected areas in
Ukraine.
・ Forest Code: The Forest Code covers not only forested lands, but all lands supervised by the State Forestry
4-39
Committee, which include many wetlands and certain agricultural lands.
・ Water Code: defines roles and responsibilities of state institutions in water management, briefly mentioning
that waters found within protected areas are thereby protected.
・ Law on Ecological Expertise (IEE) (1995): The framework for environmental impact assessments (EIAs)
that apply to new projects that may have adverse impacts on the environment.
・ Law on the Ukraine Nature Reserve Fund (1992)
・ Law on Animals (2001)
・ Law on Plants (1999)
・ Law on the Red Book of Ukraine (2002)
・ Law on Environmental Audits (2004)
・ National Program for Establishment of the Ecological Network (EcoNet) in Ukraine in 2000-2015: The
objective of the program is to establish an EcoNet in Ukraine by 2015 in a manner compatible with the
pan-European EcoNet. The EcoNet has 3 tiers -natural regions (which normally should have a protected
area as its core), buffer zones, and corridors. One of the key objectives of the EcoNet Program is to extend
the EcoNet coverage and thus maintain as much as possible of ecosystems in their natural condition, while
allowing for sustainable economic activities (both within and outside of protected areas).
・ Action Program for Biodiversity Conservation and Protected Area Management in Ukraine through 2020:
The Program calls for the establishment of a representative and well-managed protected area network, the
“Ecological Network” or “EcoNet,” by 2020.
f) Hazardous Materials and Waste Management
The laws and regulations concerning waste management in Ukraine includes:
・ On Approval of the Regulation on Development, Approval and Amending of Waste Production and
Disposal Limits, No. 1218, 3 August 1998, with amendments No. 1518 of 11.10.2002.
・ On Approval of the Regulation on the Register of Waste Disposal Sites, No. 1216, 3 August 1998.
・ On Approval of the Regulation on the Register of Waste Production, Treatment and Utilization Objects,
No.1360, 31 August 1998.
・ On Approval of the Regulations on Control of the Transboundary Movement, Utilization and Elimination
of Hazardous Waste and Yellow and Green Lists of Dangerous Chemical Substances, No. 1120, 13 July
2000, with amendments No. 1481 of 28.09.2000 and No. 1518 of 11.10.2002.
・ The law of Ukraine from March 5, 1998 of No. 187/98-BP "About waste" (current state on 16.10.2012)
・ The resolution of the Cabinet of Ministers of Ukraine from September 11, 1996 of No. 1100 "About the
Procedure for development and approval of standard rates of maximum permissible waste interception of
polluting substances and the list of the polluting substances, which waste interception is normalized"
(current state on 17.10.2012)
3) Outline of the EIA of the Host Country needed for the Project Implementation and the Measures to be taken
a) EIA (Environmental Impact Assessment) in Ukraine
The EIA system in Ukraine is established on the basis of the system from the time of Soviet Union. The EIA
system is regulated by plural statute laws, guidelines and national standards, and the amendments of regulation
are in progress in order to adapt the EIA procedure to the EU's EIA.
The EIA system constitutes a principal part of the approval for engineering (design) and construction, and is
mandatory for a national project or a project related to plural local administration and to be considered to have
high environmental risk. For a project with potential low risk, only a limited EIA approved by MEP and
Ministry of Health is required. Approximately 6,000 EIA are conducted in a year in Ukraine, most of which are
conducted in the stage of F/S survey in the early stage of the project.
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22 categories of projects excluding agriculture are considered as high-risk and required to conduct hearing of
the State Ecological Expertise (SEE)’s opinion. Expert’s opinion is required in a national, state, regional level.
Opinions of MEP expert are necessary in case of the project with investment of over 6 million dollars, whereas
opinions of expert of high level are generally not required in case of the project with investment less than 6
million. The following items are assessed by SEE.
・ Compliance with the Environmental Laws
・ Compliance with the local regulations
・ MAC (Maximum Allowable Cconcentration) of pollutants
・ Rational use of resources
・ Minimization of the environmental impact
In accordance with the amendment of the Law of Ukraine on amendments to certain laws of Ukraine concerning
the implementation of the provisions of the Convention on Environmental Impact Assessment in a
Transboundary Context, certification No. 318, the following items are required to be described in the EIA.
・ Description of the planned activities, which should include: a description of the physical characteristics of
the production facility and associated facilities, schedule of the construction, types and quantities of
materials to be used, etc.
・ Goals of the planned activities
・ Alternatives (territorial or technological, etc.)
・ Current status: population, fauna, flora, soil, water, air, climatic factors, cultural heritage, landscape, etc.
・ Potential impacts to the natural and social environment: the use of natural resources, emissions, discharges
of pollutants, noise, the implementation of waste management, etc.
・ Environmental impact prediction
・ Environmental impact mitigation measures: environmental protection measures, emission reduction
measures, etc.
・ Non-technical summary
・ Identification of problems
・ Comments and suggestions, which were received after the publication of the Statement of Intent
・ Outline for monitoring program
The EIA report, after including the opinions from the State Ecological Expertise (SEE), will finally be approved
by the cabinet council. The SEE endorsement is valid for 3 years from the date of issue. This means that if
construction does not start during this period, the whole EIA procedure would need start all over from the
beginning. The EIA approval procedure includes:
・ Submission of the “Statement of Intent” by the project proponent
・ Preparation of the EIA report by the project proponent
・ Opinions from the SEE
・ Public consultation
・ Final approval of EIA
In Ukraine, the implementation of public consultation and information disclosure concerning EIA is required by
the law during the approval process of the project. An EIA report is disclosed on the official website of the
government and opinions from the public invited. The procedure of the public consultation and information
disclosure is regulated by the MEP Order No.168 of 18/12, 2003.
b) Measures to be taken for the EIA
In Ukraine, the legal revision of the EIA is in progress according to the European legal systems. Paying attention
to the trend of these revisions, the EIA for the project needs to be implemented in the future.
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It is essentially important to disclose the information and conduct public consultation from the earliest possible
stage of the project’s EIA according to the laws and regulations of Ukraine and the environmental social
consideration guidelines of JICA and others, and thereby appropriately collecting the local people and
stakeholder’s opinions and reflecting them to the design, construction activity and operation of the project.
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(5) The Requirement for the Host Country (Project Proponent and other related Organizations) for the Implementation of the Project The project is planed for the expansion of the existing power plant. In view of the deterioration of the existing
units, the project proponent should develop the EIA report according to the laws and regulations of Ukraine based
on the result of the survey and prediction listed below, including the adequate consideration of
stopping/decommission of the existing units, efficiency of the fuel gas treatment system, water use, thermal
effluent discharge, taking special attention on the cumulative impact, in order to improve or not to deteriorate the
present status.
・ Air quality: assessment of the current pollution level
・ Water quality: assessment of the current water temperature of the reservoir in relation to the thermal
effluent discharge
・ Noise: assessment of noise level in the surrounding residential area
Chapter 5 Financial and Economic Evaluation
5-1
(1) Project Cost Estimation
1) Construction Cost (Engineering, Procurement and Construction: EPC)
Based on the configuration diagram of the proposed power plant shown in Figure 3-3 Chapter 3 and the average
figure of the contract amounts of the recent USC coal-fired TPPs being used as a reference, EPC cost is estimated
as the Table 5-1. District heating shall be provided by the existing facilities and no cost is included for this
purpose.
Table 5-1 Construction Cost of 600MW USC Coal-Fired TPP
Item Cost Breakdown
Foreign (US$ mil) Local (UAH mil.) Total (US$ mil)
1 Boiler & Environmental Equipment 311.8 188.0 334.7
2 Steam Turbine Generator 213.2 56.4 220.1
3 Coal & Ash Handling Systems 73.4 56.4 80.2
4 I&C and Electrical Equipment 59.6 18.8 61.9
5 Mechanical Equipment 87.1 56.4 94.0
6 Civil & Installation Works incl. in the above incl. in the above incl. in the above
7 Sub-total 745.1 376.0 790.9
8 Contingency (10% of Sub-total） 74.5 37.6 79.1
9 Total 819.6 413.6 870.0
US$1=UAH8.20
(Source: prepared by the Study Team)
2) Initial Investment Cost
The following items are counted as the initial investment cost.
a) EPC cost shown in the above 1)
b) Construction cost of 750kV sub-station (S/S) and transmission line (T/L)
c) Costs for finance arrangement and approvals/licenses
d) Interest during the construction (IDC)
Table 5-2 Initial Investment Cost
Item Remarks Cost Breakdown
Foreign (US$ mil) Local (UAH mil) Total (US$ mil)
1 EPC Table 5-1 819.6 413.6 870.0
2 S/S and T/L T/L length: 20km 10.0 82.0 20.0
3 Other Costs 5% of (1+2 ) 41.5 24.8 44.5
4 IDC Table 5-3 50.5 0.0 50.5
Total 921.6 520.4 985.0
(Source: prepared by the Study Team)
5-2
IDC is calculated, the following parameters being used.
a） Debt Amount: 80% of the sum of item no 1, 2 and 3 in Table 5-2
b）Disbursement: equal installment every 6 months for 4.5 years of construction period
c） Interest Rate: 3.00% JICA’s overseas investment and loan with the maturity of 25 years (5 years’ grace
and 20 years’ repayment) including 20 years’ swap spread for converting Yen to US$
Table 5-3 IDC Calculation
Year Disbursement (US$ mil) Loan Balance (US$ mil） Interest (US$ mil)
0.5 83.067 83.067 0.623
1.0 83.067 166.133 1.869
1.5 83.067 249.200 3.115
2.0 83.067 332.267 4.361
2.5 83.067 415.333 5.607
3.0 83.067 498.400 6.853
3.5 83.067 581.467 8.099
4.0 83.067 664.533 9.345
4.5 83.067 747.600 10.591
Total 747.60 50.46
(Source: prepared by the Study Team)
3) Running Cost
The following items are counted as the running cost.
a) Operation and Maintenance (O&M) Cost
b) Fuel Cost: 600,000kW÷ (1-0.078(own use)) x 24hrs x 310d/y (availability:85%) x 860kcal/kWh
(conversion)÷5,750kcal/kg (calorific value of coal)÷41%(efficiency of TPP) x US$0.09/kg (price of coal)
c) Land cost: 0 (since TPP will be constructed within the existing TPPs’ site)
d) Insurance costs are included in the above a).
e) Interest Rate: 3.00%, principal repayment in equal 40 installments (every 6 months for 20years)
f) Corporate Tax: 16% (The government has announced the rate shall be reduced to 16% in 2014.)
Table 5-4 Running Cost
Item Annual Cost
Foreign (US$ mil/year) Local (UAH mil/year) Total (US$ mil/year)
1 O&M Cost 10.0 164.0 30.0
2 Fuel Cost 0.0 1,303.8 159.0
3 Land Cost 0.0 0.0 0.0
4 Insurances included in above1 included in above1 included in above1
5 Interest Rate 3.00% 0.0 3.00%
6 Corporate Tax 0.0 16% 16%
US$1=UAH8.20
(Source: prepared by the Study Team)
5-3
(2) Preliminary Financial and Economic Evaluation
1) Financial Internal Rate of Return (FIRR)
FIRR is calculated with the following preconditions:
① Selling price is US$60 per Mega Watt hour (MWh), which is advised by NERC as the current selling price
of electricity generated by coal-fired TPPs in Ukraine.
② Annual operation hours are 7, 440 hours (24hours/d x 310d/y (availability 85%)).
③ The efficiency of the plant is 41% and efficiency degradation or drop in output is not considered thanks to
adequate maintenance.
④ TPP’s own use of electricity is 7.8%.
⑤ Calorific value of fuel coal is 5,750kcal/kg and the price of coal is US$90/t.
⑥ 2.39%, which is the average figure of USA’s last 10 years, is used as the inflation rate, since the calculation
is made in US$. It is applied for the income and the operation cost from the next year of commercial
operation.
⑦ Construction period is 4.5 years, however “5 years” is used in this calculation. And commercial operation
starts on 6th year when the repayment stars too.
⑧ Depreciation period is 40 years. The same amount is depreciated in every year and the residual value is
zero.
⑨ Operation years are 40 years which is same as the depreciation period.
⑩ Debt equity ratio is 80%:20%.
The result is shown in Table 5-5 and FIRR is calculated at 8.11%.
As FIRR is bigger than 7.50~7.75% which are Ukrainian policy interest rates in the recent years, the project is
financially viable as far as the above preconditions are actual and reasonable ones.
5-4
Table 5-5 FIRR Calculation
(Unit: US$ million)
(Source: prepared by the Study Team)
O&M DebtCost Repayment
1 2 3 4 5 6=2-3-4-5 7 8=6-7 9=8+5+4-11 189.39 -189.392 194.38 -194.383 199.36 -199.364 204.34 -204.345 197.49 -197.496 267.84 188.96 62.74 24.62 -8.48 0.00 -8.48 78.887 274.24 193.47 61.56 24.62 -5.42 0.00 -5.42 80.778 280.80 198.10 60.38 24.62 -2.30 0.00 -2.30 82.709 287.51 202.83 59.20 24.62 0.85 0.14 0.72 84.54
10 294.38 207.68 58.01 24.62 4.06 0.65 3.41 86.0511 301.41 212.64 56.83 24.62 7.31 1.17 6.14 87.6012 308.62 217.73 55.65 24.62 10.62 1.70 8.92 89.1913 315.99 222.93 54.47 24.62 13.97 2.24 11.74 90.8314 323.55 228.26 53.29 24.62 17.38 2.78 14.60 92.5115 331.28 233.71 52.10 24.62 20.84 3.33 17.50 94.2316 339.20 239.30 50.92 24.62 24.35 3.90 20.45 96.0017 347.30 245.02 49.74 24.62 27.92 4.47 23.45 97.8218 355.60 250.87 48.56 24.62 31.55 5.05 26.50 99.6819 364.10 256.87 47.38 24.62 35.23 5.64 29.59 101.6020 372.80 263.01 46.19 24.62 38.98 6.24 32.74 103.5621 381.71 269.30 45.01 24.62 42.78 6.85 35.94 105.5722 390.84 275.73 43.83 24.62 46.65 7.46 39.19 107.6423 400.18 282.32 42.65 24.62 50.58 8.09 42.49 109.7624 409.74 289.07 41.47 24.62 54.58 8.73 45.85 111.9425 419.54 295.98 40.28 24.62 58.65 9.38 49.27 114.1726 429.56 303.05 24.62 101.89 16.30 85.59 110.2127 439.83 310.29 24.62 104.91 16.79 88.12 112.7528 450.34 317.71 24.62 108.01 17.28 90.73 115.3529 461.10 325.30 24.62 111.18 17.79 93.39 118.0130 472.12 333.08 24.62 114.42 18.31 96.11 120.7431 483.41 341.04 24.62 117.75 18.84 98.91 123.5332 494.96 349.19 24.62 121.15 19.38 101.76 126.3933 506.79 357.54 24.62 124.63 19.94 104.69 129.3134 518.90 366.08 24.62 128.20 20.51 107.69 132.3135 531.31 374.83 24.62 131.85 21.10 110.76 135.3836 544.00 383.79 24.62 135.59 21.69 113.90 138.5237 557.01 392.96 24.62 139.42 22.31 117.11 141.7438 570.32 402.35 24.62 143.34 22.93 120.41 145.0339 583.95 411.97 24.62 147.36 23.58 123.78 148.4040 597.90 421.81 24.62 151.47 24.23 127.23 151.8641 612.19 431.90 24.62 155.67 24.91 130.77 155.3942 626.83 442.22 24.62 159.98 25.60 134.39 159.0143 641.81 452.79 24.62 164.40 26.30 138.09 162.7244 657.15 463.61 24.62 168.91 27.03 141.89 166.5145 672.85 474.69 24.62 173.54 27.77 145.77 170.40
984.96 1,030.27 984.96 2,663.36 3,693.63
FIRR 8.11%
PAT Cash FlowYear Investment Revenue Depriciation PBT Tax
5-5
2) Economic Internal Rate of Return (EIRR）
GDP growth has close linkage with that of electricity demand. Considering the income obtained by selling
electricity as the social benefit, EIRR is calculated as shown in Table 5-6 under the same conditions given in the
previous section 1).
10.4%, which is the interest rate of euro bond with the maturity of 10 years issued by Ukrainian government on
30th September 2013, is used as the opportunity cost of capital and discount rate, and Net Present Value (NPV)
and Benefit Cost Ratio (B/C）are calculated. The result is shown in Table 5-7.
EIRR is calculated at 15.06% which is higher than 10.4%. And NPV and B/C are calculated at US$131.78 million
and 1.07, respectively. These figures show that the implementation of the project would be economically viable.
The results of sensitivity studies for
a) Selling Price
b) EPC Cost
c) O&M Cost
d) Fuel Cost
e) Plant Availability
f) Plant Efficiency
are shown in the next section.
5-6
Table 5-6 EIRR Calculation
(Unit: US$ million)
(Source: prepared by the Study Team)
O&M DebtCost Repayment
1 2 3 4 5 6=2-3-4-5 7 8=6-7 9=6+5-11 37.88 -37.882 38.88 -38.883 39.87 -39.874 40.87 -40.875 39.50 -39.506 267.84 188.96 62.74 24.62 -8.48 0.00 -8.48 16.147 274.24 193.47 61.56 24.62 -5.42 0.00 -5.42 19.218 280.80 198.10 60.38 24.62 -2.30 0.00 -2.30 22.329 287.51 202.83 59.20 24.62 0.85 0.14 0.72 25.48
10 294.38 207.68 58.01 24.62 4.06 0.65 3.41 28.6811 301.41 212.64 56.83 24.62 7.31 1.17 6.14 31.9412 308.62 217.73 55.65 24.62 10.62 1.70 8.92 35.2413 315.99 222.93 54.47 24.62 13.97 2.24 11.74 38.6014 323.55 228.26 53.29 24.62 17.38 2.78 14.60 42.0015 331.28 233.71 52.10 24.62 20.84 3.33 17.50 45.4616 339.20 239.30 50.92 24.62 24.35 3.90 20.45 48.9717 347.30 245.02 49.74 24.62 27.92 4.47 23.45 52.5418 355.60 250.87 48.56 24.62 31.55 5.05 26.50 56.1719 364.10 256.87 47.38 24.62 35.23 5.64 29.59 59.8620 372.80 263.01 46.19 24.62 38.98 6.24 32.74 63.6021 381.71 269.30 45.01 24.62 42.78 6.85 35.94 67.4122 390.84 275.73 43.83 24.62 46.65 7.46 39.19 71.2823 400.18 282.32 42.65 24.62 50.58 8.09 42.49 75.2124 409.74 289.07 41.47 24.62 54.58 8.73 45.85 79.2125 419.54 295.98 40.28 24.62 58.65 9.38 49.27 83.2726 429.56 303.05 24.62 101.89 16.30 85.59 126.5127 439.83 310.29 24.62 104.91 16.79 88.12 129.5328 450.34 317.71 24.62 108.01 17.28 90.73 132.6329 461.10 325.30 24.62 111.18 17.79 93.39 135.8030 472.12 333.08 24.62 114.42 18.31 96.11 139.0531 483.41 341.04 24.62 117.75 18.84 98.91 142.3732 494.96 349.19 24.62 121.15 19.38 101.76 145.7733 506.79 357.54 24.62 124.63 19.94 104.69 149.2634 518.90 366.08 24.62 128.20 20.51 107.69 152.8235 531.31 374.83 24.62 131.85 21.10 110.76 156.4836 544.00 383.79 24.62 135.59 21.69 113.90 160.2237 557.01 392.96 24.62 139.42 22.31 117.11 164.0438 570.32 402.35 24.62 143.34 22.93 120.41 167.9739 583.95 411.97 24.62 147.36 23.58 123.78 171.9840 597.90 421.81 24.62 151.47 24.23 127.23 176.0941 612.19 431.90 24.62 155.67 24.91 130.77 180.3042 626.83 442.22 24.62 159.98 25.60 134.39 184.6143 641.81 452.79 24.62 164.40 26.30 138.09 189.0244 657.15 463.61 24.62 168.91 27.03 141.89 193.5445 672.85 474.69 24.62 173.54 27.77 145.77 198.16
196.99 1,030.27 984.96 2,663.36 3,961.72
EIRR 15.06%
Year Investment Revenue Cash FlowPATTaxPBTDepreciation
5-7
Table 5-7 NPV & B/C Calculation
Figures in NPV (Unit: US$ million)
(Source: prepared by the Study Team)
Year Investment O&M CostDebt
Repayment Tax Total Cost Benefit NPV
1 2 3 4 5=1+2+3+4 6 7=6-51 37.88 37.88 -37.882 35.21 35.21 -35.213 32.71 32.71 -32.714 30.37 30.37 -30.375 26.59 26.59 -26.596 115.22 38.26 0.00 153.48 163.32 9.847 106.86 34.00 0.00 140.86 151.47 10.618 99.11 30.21 0.00 129.32 140.48 11.169 91.91 26.83 0.06 118.80 130.29 11.49
10 85.25 23.81 0.27 109.33 120.83 11.5011 79.06 21.13 0.44 100.63 112.07 11.4412 73.32 18.74 0.57 92.63 103.93 11.3013 68.00 16.62 0.68 85.30 96.39 11.0914 63.07 14.72 0.77 78.56 89.40 10.8415 58.49 13.04 0.83 72.36 82.91 10.5516 54.25 11.54 0.88 66.67 76.90 10.2317 50.31 10.21 0.92 61.44 71.32 9.8818 46.66 9.03 0.94 56.63 66.14 9.5119 43.28 7.98 0.95 52.21 61.35 9.1420 40.14 7.05 0.95 48.14 56.89 8.7521 37.23 6.22 0.95 44.40 52.77 8.3722 34.53 5.49 0.93 40.95 48.94 7.9923 32.02 4.84 0.92 37.78 45.39 7.6124 29.70 4.26 0.90 34.86 42.09 7.2325 27.54 3.75 0.87 32.16 39.04 6.8826 25.54 1.37 26.91 36.21 9.3027 23.69 1.28 24.97 33.58 8.6128 21.97 1.20 23.17 31.14 7.9729 20.38 1.11 21.49 28.88 7.3930 18.90 1.04 19.94 26.79 6.8531 17.53 0.97 18.50 24.85 6.3532 16.26 0.90 17.16 23.04 5.8833 15.08 0.84 15.92 21.37 5.4534 13.98 0.78 14.76 19.82 5.0635 12.97 0.73 13.70 18.38 4.6836 12.03 0.68 12.71 17.05 4.3437 11.15 0.63 11.78 15.81 4.0338 10.35 0.59 10.94 14.66 3.7239 9.59 0.55 10.14 13.60 3.4640 8.90 0.51 9.41 12.61 3.2041 8.25 0.48 8.73 11.70 2.9742 7.65 0.44 8.09 10.85 2.7643 7.10 0.41 7.51 10.06 2.5544 6.58 0.38 6.96 9.33 2.3745 6.11 0.36 6.47 8.66 2.19
2,008.53 2,140.31 131.78B/C 1.07
5-8
3) Sensibility of EIRR
a) Selling Price
Figure 5-1 shows the result.
Figure 5-1 Sensibility in relation to Selling Price
(Source: prepared by the Study Team)
b) EPC Cost
Although the improvement of EIRR is about 2% only by means of EPC cost being cut by 10%, it is very
important to scrutinize this cost.
Figure 5-2 Sensibility in relation to EPC Cost
(Source: prepared by the Study Team)
9.86%
15.06%
20.08%
24.75%
28.98%
0%
10%
20%
30%
50 55 60 65 70 75US$/MWh
17.09%16.37%
15.69%15.06%
14.46%13.90%
13.38%
10%
12%
14%
16%
18%
20%
1,250 1,300 1,350 1,400 1,450 1,500 1,550 1,600 1,650 US$/kW
5-9
c) O&M Cost
10% cost down causes increase of EIRR at about 0.7%.
Figure 5-3 Sensibility in relation to O&M Cost
(Source: prepared by the Study Team)
d) Fuel Cost
This factor makes higher impact to EIRR calculation, too. Thanks to shale gas revolution, international coal
market is heavily affected and the coal prices are trending south. It is important to procure quality coal with the
reasonable price.
Figure 5-4 Sensibility in relation to Fuel Cost
(Source: prepared by the Study Team)
12.97%13.67%
14.36%15.06%
15.75%16.43%
17.12%
10%
12%
14%
16%
18%
20%
60% 70% 80% 90% 100% 110% 120% 130% 140%
20.99%19.06%
17.08%15.06%
13.01%10.95%
8.88%
0%
5%
10%
15%
20%
25%
70 75 80 85 90 95 100 105 110 US$/ton
5-10
e) Plant Availability
85% of Plant availability is normal figure and it is likely to result in poorer performance. It is better to study the
other factor.
Figure 5-5 Sensibility in relation to Plant Availability
(Source: prepared by the Study Team)
f) Plant Efficiency
Plant efficiency at 41% is rather conservative premise 43% or more efficient plant should be targeted at the
detailed design stage
Figure 5-6 Sensibility in relation to Plant Efficiency
(Source: prepared by the Study Team)
10.60%12.10%
13.59%15.06%
16.55%18.00%
0%
5%
10%
15%
20%
65% 70% 75% 80% 85% 90% 95% 100%
12.14%
13.17%
14.14%
15.06%
15.93%
16.75%
17.53%
10%
12%
14%
16%
18%
20%
37% 38% 39% 40% 41% 42% 43% 44% 45%
5-11
4) Comparative Verification with Alternative
There was the expansion plan in the beginning of 1990’s that another 675MW (225MWx3units) coal-fired TPP
would be constructed in the plant site.
As well as USC technology, DTEK, the owner of the plant, is also considering Circulation Fluidized Bed (CFB）
Boiler technology since all the permits and licenses for the construction of 225MWx3 coal-fired TPPs have been
obtained.
However, CFB Boiler technology has the following negative aspects being compared with USC technology.
a) EPC Cost
In 2011 a EPC contract of 450MW (150MWx3units) was made. Its contract price per kW is US$2,180/kW
which is much more expensive than the proposed plant.
b) O&M Cost
In general CFB technology gives damages its parts due to the circulation and fluidizing and needs much
spare parts. Three units need more manpower than one unit for O&M. USC is the most efficient technology
among coal-fired technologies and CFB TPP consumes more amount of fuel.
c) Financing Source
International financial institutions in USA and Europe have negative opinion about coal-fired TPPs.
Japanese government supports USC and SC technologies, however since there is no manufacture in Japan
that has 225MW CFB boiler technology, they are not in the position to support CFB technology.
Thus, there is no major financial institution that can give loan to 225MW CFB technology.
As for quality of fuel coal such as calorific value, volatility, moisture content, there is no specific reason why CFB
boiler technology should be introduced.
Because of the aforementioned reasons, USC technology is better than CFB boiler technology.
5-12
5) Conclusion
① EPC cost must be scrutinized.
The average figure of the recent USC coal-fired TPPs’ contract amounts is used as a reference for this
evaluation. However, as there are several contracts whose unit figure is less than US$ 1,400/kW in especially
Asian countries, the same level shall be targeted for EPC cost.
② The scheme for revenue up shall be established.
The electricity prices in Ukraine are one of lowest levels among European countries. IMF has requested
Ukrainian government to hike utility charges as the one of the conditions for its financial support and therefore
the price is in uptrend.
Poland, which the electricity generated by the plant will be exported to; will have to stop the operation of
6,000MW coal-fired TPPs by 2016-2017 pursuant to EU directives. And she is going to introduce the
mechanism of “Capacity Payment” and/or Feed in Tariff with Contract for Difference following USA and UK
in order to invite foreign direct investments for building new TPPs. Thus, it will become a likely scenario to
make long term contract with the selling price of higher than US$60/MWh.
③ More economical fuel coal shall be procured.
Thanks to shale gas revolution, international coal market is heavily affected and the coal prices are trending
south.US$90 per ton is the current market price in Europe and cheaper fuel will be available in the future.
Chapter 6 Planned Project Schedule
6-1
Our assuming overall project schedule is shown in the diagram below.
Figure 6-1 Project Schedule
2014 2015 2016 2017 2018 2019 2020 2021
Feasibility Study
Environmental Social
Impact Assessment (ESIA)
Contracts’ Negotiations
Permits and Licenses
Finance Close
Site Preparation
Procurement and
Transportation
Civil & Installation
Commissioning
Commercial Operation
(Source: prepared by the Study Team)
1）Feasibility Study (F/S)
Due to very limited time allocated, this study is merely preliminary one. It therefore is necessary to implement
detailed F/S, investing a good deal of time and effort so as to optimize plant performance, re-evaluate total plant
cost and economics, and obtain the data and information for ESIA.
2）Environmental Social Impact Assessment (ESIA)
JICA’s overseas investment and loan is expected for developing the project. The international financial bodies
including JICA establish guidelines for environmental and social consideration and require implementation of
ESIA in line with the guidelines.
3）Contracts’ Negotiations
In parallel with ESIA, such agreements/contracts as Power Purchase Agreement (PPA), Fuel Supply Agreement
(FSA), EPC contract, O&M contract and etc. are negotiated.
4）Permits and Licenses
This project is not new one but extension and land acquisition for the extension unit is not necessary. So it may
take rather shorter period to obtain all the necessary permits and licenses than those projects that start from scratch.
However, in former Soviet Union countries the conformity to GOST standard is required and it takes a great deal
of time to clear the process.
6-2
5）Finance Close
Simultaneously with the above 2), 3) and 4), the negotiation with JICA and other lenders is launched.
6）From Notice to Proceed (NTP) of EPC till Commercial Operation Date (COD)
In general, the construction period of coal-fired thermal power plant depends on the delivery period of steam
turbine. The standard construction period of such plant is four and a half years.
Chapter 7 Implementing Organizations
7-1
(1) Power Sector in Ukraine
1) Power Sector
The structural reforms in Ukrainian power sector started during the Kuchma era with the support of
Euro-American consultants and international financial institutions. The trigger event was the Presidential decree
“Structural Reforms in the Power Sector in Ukraine” published on 4th April 1995.
Taking the reference to the reforms in UK, the sector was divided into generation, transmission and distribution
arms under the decree. Before the decree enacted, there existed 8 regional thermal power companies which
managed both generation and distribution of the electricity. The reforms in 1995 re-organized 4 thermal power
companies and 27 regional distribution companies. Ukraine consists of 27 administrative districts (24 provinces, 2
special cities and 1 autonomous republic), those distribution companies were established in each administrative
districts.
The organization established in 1995 are kept until now, which is shown below.
Figure 7-1 Power Sector in Ukraine
Ministry of Energy and Coal Industry (Policy making and implementation) Administrative
Bodies National Electricity Regulatory Commission (Regulator)
Thermal
Power Plants
Hydraulic
Power Plants
Nuclear
Power Plants Power
Generation Privatized State-Owned State-Owned
Ukrenergo (Transmission) State-Owned Power
Transmission
Wholesales Energorynok (Wholesales) State-Owned
Regional Distribution Companies & Independent Providers Power
Distribution Privatized
(Source: prepared by the Study Team)
7-2
a) The Ministry of Energy and Coal Industry (MECI)
On 14 April 2000, the MEC of Ukraine was established by the Decree of the President of Ukraine #598/2000. The
MECI is the main body in the system of central bodies of the executive power that provides realization of a state
policy in electrical power-generating, nuclear-industrial, and oil-gas complexes, often referred simply as the
Fuel-Energy Complex. The MECI is directed and coordinated by the Cabinet of Ministers of Ukraine.
b) National Electricity Regulatory Commission (NERC）
NERC is main regulatory for the wholesale electricity market (WEM) of Ukraine. The NERC has the authority to
・ participate in creating national policy for the development and operation of WEM,
・ regulate natural monopolies in the electricity sector,
・ implement pricing and tariff policy,
・ issue licenses for companies that produce, distribute and supply electricity,
・ approve amendments to the agreement among the WEM participants subject to approval by the MECI and
the Anti-Monopoly Committee, and
・ protect electricity consumers’ rights.
c) Thermal Power Generation Companies
5 thermal power companies exist; those are Dniproenergo (the South Thermal Power Generation Company),
Centrenergo (the Central Thermal Power Generation Company), Zakhidenergo (the West Thermal Power
Generation Company), Donbasenergo (the East Thermal Power Generation Company) and newly established
Skhidenergo.
d）Hydraulic Power Generation Companies
In 1994 Dniprohydroenergo and Dnisterhydroenergo were established by water systems. In 2004 these companies
merged into Ukrhydroenergo.
e）Nuclear Power Generation Company
State-owned company, Energoatom has been established since 1996.
f）Wholesale of Electricity, Transmission and Distribution Companies
State-owned company, Energorynok is the monopoly in electricity wholesale. Ukrenergo is the national electrical
power transmission company. 42 regional electric power distribution companies and 81 independent
power providers sell the electricity to the end users.
7-3
2) Privatization
The MECI reported that the aging ratio of thermal power plants in Ukraine increased from 65% to 76% in the past
five years. According to Energy Strategy of Ukraine for the period until 2030, it costs U$ 40 billion to modernize
all the thermal power plants. Her national budget cannot afford to do and it is necessary to invite private funds to
the fields.
The Azarov cabinet eliminated electrical power generation and distribution companies from “the significant
companies” in economic aspect and national security by means of the governmental decision made on 23
February 2011. And those companies can be privatized. Then 4 thermal power generation companies and 20
regional electrical power distribution companies became the target for privatization.
The list of thermal power generation companies and electrical power distribution companies to be privatized in
2011 and 2012 were announced by the governmental mandate dated on 11 April 2011. The information how many
shares of those companies the government would sell were also disclosed. Those were Dniproenergo: 25%,
Zakhidenergo: 45.1%、Kievenergo (thermal power generation and electricity distribution company in Kiev): 25%
and etc.
3) Zakhidenergo (the West Thermal Power Generation Company)
DTEK, which is an energy holding company, acquired 45.103 % shares of Zakhienergo. Then, about 70% of the
company is under control of DTEK, since DTEK had owned about 25% shares of the company. DTEK is part of
System Capital Management (SCM), a leading Ukrainian financial and industrial group. It was formed in 2002
and is an association of various companies from coal mining to power generation.
Zakhidenergo owns and operates 3 coal-fired thermal power plants; those are Dobrotvirska coal-fired thermal
power plant in Lviv region, Burshtynskaya coal-fired thermal power plant in Ivano-Frankivska region and
Ladyzhinskaya coal-fired thermal power plant in Vinnitsya.
Exceptionally, Dobrotvirska and Burshtynskaya coal-fired thermal power plants connect to European Network of
Transmission System Operators for Electricity (ENTSO-E) and therefore electricity generated by those power
plants can be exported to the surrounding countries such as Poland, Hungary, Slovakia and Romania.
7-4
Figure 7-2 European Network of Transmission System
(Source: ENTSO-E Statistical Year Book 2009)
7-5
(2) DTEK
1) General
DTEK is an energy holding company headquartered in Donetsk, Ukraine. It was formed in 2002 and is an
association of various companies from coal mining to power generation. The name of the company is an
abbreviation from its original name Donbass Fuel-Energy Company in Ukrainian
The key business segments of DTEK are coal mining and preparation, electrical power generation, and electrical
power sales and supply.
Figure 7-3 Company Structure
(Source: DTEK Annual Report 2011)
2) Coal Mining and Preparation
The coal mining of DTEK is represented by 6 largest companies in the industry: DTEK Pavlogradvuhillia (10
mines), DTEK Dobropilliavuhillia (5 mines), DTEK Rovenkianthracite (6 mines), DTEK Sverdlovanthracite (5
mines), DTEK Mine Komosomolets Donbassa (1 mine) and ALC Mine Bilozerska (1 mine). In addition, the coal
preparation of DTEK consists of 12 plants.
The coal mining product is thermal and coking coal. The main consumers are companies of DTK electricity
generation. (There are some differences between 2011’ and the current data)
4 Operations
TPP: Thermal Power Plant
CHPP:
DTEK Pavlogradugol(10 mines)
DTEK Skhidenergo(3 TPPs)
Service-InvestDTEK Trading
(Coal Sales)
DTEK
Coal Mining Power Generation Power Distribution and Sale Other
DTEK Mine KomsomoletsDorbase (1 mine)
DTEK Dniproenergo(3 TPPs)
DTEK Energougol ENEDTEK Power Trade(Electricity Sales)
DTEK Dobropolyeugol(6 mines)
CHPP-5, CHPP-6 DTEK Donetskoblenergo Wind Power
Socis (Management ofSocial Infrastructure)
DTEK Rovenkyanthracite(6 mines)
DTEK Zakhidenergo(3 TPPs)
Kyvenergo DTEK Oil & Gas
DTEK Sverdlovathracite(5 mines)
DTEK DniprooblenergoDTEK Service
(Administrative Support)
Coal Processing(11 factories)
DTEK KrymenergoCombined Heat &Power Plant
7-6
3) Electrical Power Generation
The electrical power generation of DTEK consists of
① DTEK Skhidenergo,
② DTEK Dniproenergo (DTEK owns 72.9%),
③ Kyivenergo (DTEK owns 72.39%), and
④ DTEK Zahidenergo (DTEK owns 70.91%).
The total installed capacity of the above 4 companies is 18.2 GW. The generated electrical power is supplied to
the wholesale electricity market of Ukraine. In addition to electricity sale in Ukraine, DTEK exports electricity to
Slovakia, Romania, Hungary, Poland, and Belarus. DTEK is the only Ukrainian company that exports electricity.
4) Electrical Power Sales and Supply
The electrical power sales and supply of DTEK consists of the network companies
① DTEK Dniprooblenergo (DTEK owns 51.50%),
② Kievenergo (DTEK owns 71.82%),
③ DTEK Donetskoblenergo (DTEK owns 71.34%),
④ DTEK Krymenergo (DTEK owns 57.6%),
⑤ DTEK Energougol ENE and
⑥ Service-Invest.
They purchase electrical power in the wholesale electricity market and sell and supply it to end consumers. Key
consumers are the metal and coal industry, and population. The total length of the network is 159,000 km.
5) Key Production Indicators
DTEK’s key production indicators in recent years are shown below.
Table 7-1 DTEK’s Key Production Indicators
Indicators unit 2011 2012 Change Change (%)
Coal Production kilo ton (kt) 24,001.4 39,693.3 15,691.9 65.4
Coal Preparation
Run of Mine Coal Preparation kt 1,3690.0 27,692.3 14,002.3 102.3
Concentrate Output kt 8,729.8 18,311.1 9,581.3 109.8
Electricity Generation GWh 17,135.1 51,382.7 34,247.6 199.9
Electricity Purchased from WEM GWh 14,066.1 53,918.4 39,852.3 283.3
Electricity Exports GWh 5,091.9 9,707.0 4,615.1 90.6
Coal Exports kt 3,396.0 2,745.1 -650.9 -19.2
Coal Imports kt 569.0 1.4 -567.6 -99.8
(Source: DTEK Annual Report 2012)
7-7
DTEK’s market share in Coal mining, electricity generation and electricity distribution are shown below.
Figure 7-4 DTEK’s Market Share
(Source: DTEK Annual Report 2012)
The following table shows the countries that DTEK sold electricity to and those volumes in 2011 and 2012.
Table 7-2 Electricity Exports from Ukraine
Unit: TWh
Country 2011 2012 Change
Belarus 2.56 4.05 58.2%
Hungary 2.47 3.60 45.7%
Moldova 0.67 0.85 26.9%
Slovakia 0.59 0.10 -83.1%
Russia 0.06 0.00 -100%
Poland 0.06 1.01 1,583.3%
Romania 0.03 0.16 433.3%
Total 6.44 9.75 51.4%
(Source: DTEK Annual Report 2012)
DTEK46.1%
Coal Mining
DTEK28.5%
Electricity Generation
DTEK37.8%
Electricity Distribution
7-8
6) Financial Performance
DTEK’s key financial performance in the last three years is shown below.
Figure 7-5 DTEK’S Key Financial Performance
EBIDA: Earnings Before Interest, Taxes, Depreciation, and Amortization
(Source: DTEK Annual Report 2012)
3,060
4,969 10,332
773 1,290
2,119
360 442 741
0
2,000
4,000
6,000
8,000
10,000
2010 2011 2012Revenue EBITDA Net Profit
Unit: US$ million
7-9
(3) Evaluation of Implementing Organizations
1) Technical and Personnel Aspects
DTEK that 140,000 professionals are working for is the largest energy company in Ukraine. In addition to
creation of new jobs, paying US$ 1.93 billion for taxes in 2012, which is three times bigger than the figure in
2011, DTEK contributes to economic and social development in Ukraine.
As mentioned in the above, DTEK owns and operates 9 coal-fired TPPs and 2 CHPPs under 4 thermal power
companies.
As all the coal-fired TPPs are old and in accordance with Directive 2001/80/EU, DTEK has started taking
measures to reduce the emissions of Sulfur Oxide (SOx), Nitrogen Oxide (NOx), and soot dust. As the result,
DTEK invested more than US$ 1,275 million in 2012 to modernize and develop its facilities. The figure is more
than half of all of the investments of SCM group.
DTEK currently is selecting technologies for desulfurization and deNOx systems to be installed to all of DTEK’s
coal-fired TPPs, and has the plan to build 800MW coal-fired TPP at Burshtynska TPP with the most advanced
technologies. With the grant fund provided by the United States Trade and Development Agency, the feasibility
study is developed including the justification of the selected technologies in accordance with the requirements of
Ukraine and ENTTSO-E.
Thus, any problem cannot be seen in both technical and human resources aspects.
7-10
2) Financial Arrangements
Most of DTEK’s debt as of yearend 2012 was denominated in Russian Ruble (RUB), Euro (EUR) and US$.
Borrowings denominated in RUB amounted to US$ 879 million, which was equivalent to 34.0% of the loan
portfolio; in EUR – US$ 844 million or 32.6%; in US$ - US$ 636 million or 24.6%. Debt denominated in UAH
amounted to US$ 226 million or 8.8% of the loan portfolio.
Figure 7-6 Debt Currency Portfolio
(Source: DTEK Annual Report 2012)
The DTEK’s debts were mostly long-term liabilities. The average repayment period as of yearedn 2012 was 3.3
years. The largest part of DTEK’s debt was comprised of Eurobonds, bilateral bank loans and the club loan. The
share of long-term liabilities in the overall loan portfolio was 83.5%.
The key ratios of DTEK’s equity to borrowe funds as of 31 December 2012 were shown below. The figures show
debt ratio is relatively high.
Table 7-3 The Key Ratios of DTEK’ Equity borrowed Funds
2010 2011 2012
Total Debt/EBITDA 0.9 1.65 1.36
Net Debt/EBITDA 0.6 0.63 1.04
EBITDA/Interst and Expenses 13.5 16.7 10.9
(Source: DTEK Annual Report 2012)
According to DTEK Annual Report 2012, a long term credit rating of DTEK in December 2012 was evaluated as
“B3” with an outlook of “Negative” by Moody’s Investors Services. In January 2013, Fitch Ratings gave a long
term credit rating of DTEK of “B” with an outlook of “Stable”.
The above circumstances make it even more difficult to make financial arrangement.
RUB, 34.0%
EUR, 32.6%
US$, 24.6%
UAH, 8.8%
20,662UAH mil.
Chapter 8 Technical Advantages of Japanese Companies
8-1
(1) Expected Formation of Japanese Companies’ Participation
JICA’s overseas investment and loan is expected to be offered for the implementation of the project. In this regard,
substantial involvement of Japanese companies is imperative. The following fields are expected for Japanese
companies’ participation.
1) Equity Participation
JBIC/NEXI requires Japanese investors to take 30% or more of equity participation in order for them to provide
project finance/investment insurance, respectively. JICA has limited experience to make overseas investment or
offer project finance, and the conditions demanded by JICA shall be established with the reference JBIC/NEXI’s
requirements in the process of the negotiation with Japanese investors,
2) Engineering, Procurement and Construction (EPC)
There are several Japanese heavy electric machinery manufactures that have outstanding capacity for
technological development to meet advanced technology requirements. They keep price competitiveness
especially in the fields of environmental responsiveness, energy conservation, reduction in size and weight.
They also have been developing USC technology in the domestic market and are proud of rich supply records of
USC coal-fired TPPs, and therefore keep price competitiveness against US/EU manufactures.
3) Operation and Maintenance (O&M)
ITOCHU Corporation affiliates NAES Corporation which is one of leading O&M companies for TPPs in USA.
NAES covers European markets and will be able to take O&M role of the project.
4) Fuel Supply
Ukraine is the 2nd largest producer of hard coal in Europe, however, due to inefficient mining technology and
redundant staff for the purpose of job creation, loses price competitiveness in the international market.
DTEK, the owner of the plant, has coal mines in the eastern part of the country. However because of the
transportation cost, it procures 90% of fuel for the plant from their competitors whose coal mine is located near
the plant. There is a chance for Japanese companies to supply fuel if an attractive price could be proposed.
8-2
The fields filled with yellow color in Figure 8-1 are those where Japanese companies’ participation are expected.
Figure 8-1 Expected Project Scheme
(Source: prepared by the Study Team)
8-3
(2) Advantages of Japanese Companies on the Project
1) Advantages in Technical Aspect
Japanese manufactures and utility companies have technical advantages over those in other countries in especially
USC technologies.
Through the long experience of implementing USC TPPs under the highest environmental requirements in Japan,
Japanese companies have been maintaining high standard at the world state-of-the-art level. As the result,
Japanese manufacturers have enjoyed a lot of delivery records and kept competitiveness against European
manufactures. Some of Japanese manufactures give licenses of USC technology to foreign manufactures and
receive orders even from European countries.
It is necessary to meet the more strict environmental standards required by the local government in Japan rather
than USA or Europe, which advances Japanese technological level to the highest one.
Not only plant performance, but also O&M technology in USC such as advanced automation operation and high
availability factor etc. is in the level of the world state-of-the-art. Japanese companies have established O&M
support system, responding carefully to the needs of the owners.
Also Japanese manufacturers have advanced software technology so that Japanese manufacturers can propose
competitive infrastructural systems.
The Japanese manufacturers have a competitive edge in the field of environmental impact reduction and energy
conservation. In particular, they can accommodate advanced requirements from the foreign clients against the
background of the technical capabilities that they have corresponded O&M issues to domestic power companies.
8-4
2) Advantages in Economic Aspect
a) New Policies of US and European Financial Institutions
The financial public sector agencies in USA and Europe tend to stop giving loan to the coal-fired TPPs.
On 25th June 2013, Mr. Obama, the President of USA, announced the “Climate Action Plan”, in which he
declared to terminate official support to the construction of coal-fired TPPs abroad, and requested the other
countries and international financial institutions to take the similar actions.
The export and import bank of USA supported the policy of the President and decided on 18th July 2013 not to
allocate finance to Thai Binh unit 2 sub-critical coal-fired TPP in Vietnam. Despite this, the EIA process for the
project had being finalized.
The bank had given US$ 800 million of finance to 4,800MW coal-fired TPPs in South Africa and US$ 900
million of finance to 4,000MW coal-fired TPPs in India in the last five years.
Denmark, Finland, Island, Norway, and Sweden agreed to the policy of USA and those 6 countries made a joint
announcement in September 2013.
The World Bank, European Investment Bank (EIB) and European Bank for Reconstruction and Development
(EBRD) endorse the action of USA.
The board meeting of the World Bank held on 16th July 2013 and argued the new policy on the energy sector. It
has been announced to the public that the bank stops giving loan to the coal-fired TPPs except for the very
specific case.
The board meeting of EIB held on 23rd July 2013 and argued the new policy on the energy sector too. Since then
EIB has restricted the eligible coal-fired TPPs to those
① whose CO2 emission is 550g/kWh or less, and
② where CO2 Capture and Storage (CCS）facility is ready to be installed.
EBRD, which is established in order for the countries located in Central and Eastern Europe to move to market
economies, announced the draft of the new policy on the energy sector and accepted public comments on it until
30th September 2013.
Under such circumstances, the export credit agencies in German and France are paid marked attention to if they
follow EIB/EBRD’s actions, since Siemens and Alstom, which are main equipment suppliers of coal-fired TPP,
have manufacturing bases in those countries.
8-5
b) Policy of Japanese Government and Official Bodies in Japan
On the other hand, Japanese government has committed herself in White Paper on International Economy and
Trade 2013 to supporting Japanese companies’ exporting infrastructures and systems including the USC coal-fired
TPPs by using official development assistance (ODA). Japan now exports Japanese Yen 10,000 billion of
infrastructures and systems, which includes the returns from overseas investments. The government has targeted
the figures to be triple in 2020.
The Ministry of Economy, Trade and Industry (METI) has tightened up on the collaboration with those
organizations which have ODA tools in order for Japanese companies to get more orders from abroad. METI tries
to support Japanese companies from the stage of fact findings to financial closure of projects in a consistent way.
METI has regular meetings with JBIC, JICA, JETRO, and NEDO (New Energy and Industrial Technology
Development Organization) in order to implement those projects that METI has given its supports to.
JICA has been giving soft loans to developing countries and restarted overseas investment and loan to those
projects to which Japanese companies make investment since October 2012.
NEXI takes an important role in overseas investment and loan to provide a variety of insurances to cover political
risks.
For the achievement of the target, it is important to make the bodies concerned fully understand the advantages in
both the technical aspect and management of Japanese companies and strengthen relationship with the key
persons. JICA undertakes this role and in 2012 accepted 2,202 trainees to Japan and dispatched 127 specialists to
abroad.
8-6
(3) Measures Required to Promote Orders to Japanese Companies
JICA’s overseas investment and loan is expected to be offered for the implementation of the project.
As mentioned in the previous section, the financial public sector agencies in USA and Europe tend to stop
providing finance toward coal-fired TPPs.
On the other hands, Chinese contractors and manufacturers boost their orders in this field. Being not the member
of Organization for Economic Co-operation and Development (OECD), China does not need to follow the
guidelines of OECD and can give loan to any projects.
Japanese companies have been facilitating advanced technologies such as USC coal-fired TPPs and making effort
to realize the low carbon society. In order to achieve the target more smoothly, the official support from Japanese
government is also indispensable.