World Economy

Coal Shortage Puts Kiev in Awkward Position

Coal Shortage Puts Kiev in Awkward PositionCoal Shortage Puts Kiev in Awkward Position

With the rich seams of coal in eastern Ukraine under rebel control and Russia cutting off supplies, the Kiev government faces the awkward prospect of turning to its enemies for help.

As winter set in, the biggest fear in recent months was that Ukraine would run out of the natural gas that heats the country, AFP reported.

A last minute deal with Russia averted that disaster. But now a new one is looming as coal shortages threaten to leave the country desperately short of electricity.

Ukraine gets some 40 percent of its power from coal-fired plants, and has traditionally had a surplus of coal, producing some 86 million tons at last count in 2012.

But the Russian-backed rebellion in the east has cut the government off from large swathes of the coal-rich mining region of Donbass.

Then, without warning, Russia announced it was stopping coal supplies to Ukraine last week, claiming “force majeure” but offering no explanation.

“I don’t know for how long Russia intends to stop coal deliveries. If it stops them for a long period, our thermal stations will not be able to function at full power,” said Ukraine’s Energy Minister Yuriy Prodan.

Official statistics shows the country needs a million tons of anthracite coal per month to feed its power stations. By November 24, only 1.8 million tons were left in the reserves.

Experts say Ukraine is short some three million tons for the winter season.

  Three Bad Options

Ukraine has three options, none of them very appealing.

It can ship in coal from abroad; the United States, Vietnam and Australia are potential suppliers. But deliveries would take around a month and would be far more expensive at a time when Ukraine’s economy is teetering on the verge of collapse. A tentative deal with South Africa appears to have fallen through for reasons that remain unclear.

The second option is to buy electricity directly from Russia. Prodan said the government was considering the option.

The final option is the most awkward: buying coal from the very rebels its army is fighting.

With nearly 4.5 million tons of coal stored in Donbass reserves, it would be the quickest and cheapest option. Separatist leaders said in September that talks were planned, although the government denied this.

Whatever choice Ukraine makes, time is running out. “The shortages will start in mid-December.

In February, the situation will be very serious,” said Kharchenko.