The OGK-3 (RTS: OGKC) BoD has approved a new coal strategy for the company. The strategy is part of a comprehensive fuel supply strategy being worked out by the company. The targets set by the company are to ensure reliable and uninterrupted high-quality fuel supplies to its power stations, enhance fuel-efficiency and bring fuel costs down to a minimum. Other goals pursued by the company are to re-equip its power plants and establish its own coal-mining base.
The genco previously formed the Ugolny Razrez (Coal mine) subsidiary to tap the remaining coal reserves in the Buryat Republic in order to meet the needs of its own power plants and outside consumers in the region. The projected output of two million tons of coal a year should be attained by 2011. In three to four years, the OGK-3 management plans to be self-sufficient in at least 50% of its solid fuel needs.
In so doing, OGK-3 is attempting to diversify its fuel supplies in order to reduce its reliance on monopoly coal providers. In addition, the genco will be in a position to tighten controls over its fuel expenses, which constitute up to half the total costs in the thermal power generation segment. We believe that the company’s efforts at ensuring stable fuel supplies to its production units will help it streamline its performance in the future.
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