UPDATE 2-Ukraine slashes power to Crimea as electricity crisis deepens

Wed Sep 3, 2014 10:26am EDT

Related Topics

* Power market is in state of emergency

* Fighting in eastern regions halted coal supplies to power plants

* Ukraine supplies 80 pct of Crimea's electricity (Adds quote on possible blackouts, expected coal imports)

By Pavel Polityuk and Svetlana Burmistrova

KIEV/MOSCOW, Sept 3 (Reuters) - Ukraine reduced electricity supplies to consumers in Crimea on Wednesday and threatened to cut power altogether if quotas were breached, as it battles a power crisis on the mainland that threatens to cause rolling blackouts across the country.

Kiev has declared a state of emergency on the electricity market after months of fighting between pro-Russian rebels and Ukrainian forces disrupted supplies to thermal power plants (TPP), which provide around 40 percent of Ukraine's electricity.

The power crisis together with an expected shortfall in gas supplies from Russia mean Ukraine faces a winter that Prime Minister Arseny Yatseniuk said would be "extremely difficult".

The southern peninsula of Crimea, which depends on Ukraine for around 80 percent of its power, was seized by Russia in March - an annexation Ukraine has refused to recognise.

But state electricity company Ukrinterenergo said supplies to Ukrainian citizens now took precedence over flows to residents of Crimea, the first time officials have signalled a change in status for the peninsula.

"The priority for Ukrinterenergo is the interests of Ukrainian citizens for whom conserving power is becoming an urgent issue," it said in a statement.

"If the limits are not adhered to by the consumers of Crimea, the company will be forced to completely turn off supply lines to the peninsula."

It said flows would be limited to 300 megawatts (MW) in the morning and evening, 500 MW during the day and 600 MW at night. Average consumption in Crimea is usually 1,000 MW, according to Ukrinterenergo.

Russia's Energy Ministry said flows to Crimea had not fallen on Wednesday. Moscow has shipped mobile generators to the peninsula that can provide back-up power of up to 700 MW per day for use in case of power outages, Crimean Prime Minister Sergei Aksyonov has said.

COLD, DARK WINTER

The mining of thermal coal, used for power generation, is centred in Ukraine's industrialised eastern regions where fighting between pro-Russian rebels and Ukrainian forces has destroyed infrastructure and disrupted supply networks.

In August, the miners' union said half of the coal mines in Ukraine, Europe's second-largest coal producer, had halted production. Ukraine's Energy Ministry said on Tuesday the fighting had prevented supplies reaching TPPs, six of which were experiencing shortages.

"Fuel shortages and the resulting lack of power generation is leading ... to possible rolling blackouts in power supply to the population on Ukrainian territory at peak times," Ukrinterenergo said.

To try to make up for supply shortfalls, Ukraine, usually a net exporter, has started importing thermal coal, including 1 million tonnes from South Africa.

Reserves will also be boosted with supplies from Australia, South Africa and Vietnam, while possible contracts with U.S., Columbian and Russian suppliers have been discussed, Ukraine's Energy Ministry said on Tuesday.

According to a source in the Ukrainian energy market, the country may need to import 1.2 million tonnes of coal per month.

Deputy Energy Minister Vadym Ulyda said Kiev would only introduce blackouts as a last resort. "A shutdown would be the last possible step," he told journalists.

"There's a war going on in the country, we have to be prepared for any eventuality." (Additional reporting by Anastasia Lyrchikova; Writing by Alessandra Prentice; Editing by Elizabeth Piper and Hugh Lawson)

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