SCM GROUP PUBLIC REPORT 2011

Power distribution
DTEK's power distribution enterprises continued the upgrade
of the existing equipment and the construction of the new
units. Particularly, the reconstruction works were performed
at Druzhkovka, Davydovka-Severnaya, Zueyvka, Ugolno-
Rtutnaya, Novomakeyevka, and Shvernik (all Service-Invest)
substations, as well as at Skiv, Oktyabrskaya, and Yuzhno-
Donbasskaya #1 substations (all DTEK PES-Energougol).
The renovations of the high-voltage transmission lines also
continued. Additionally, Service-Invest completed the construction
of the two substations, one of which is intended to
supply electricity to Donetsk airport.
The construction of Airport–110 kV substation was carried
out within the framework of preparations to Euro–2012
and was completed precisely on schedule. For the first time
in Donbass, the new generation of electric equipment (ABB,
Sweden-Switzerland) was installed. The total volume of investment
amounted to $9.8m.
The total volume of investment in the construction and the reconstruction
of Service-Invest substations in 2011 amounted to
$26m, and that of DTEK PES-Energougol – amounted to $5m.
In 2011, the volume of investment in developing Kievenergo's
heat generation amounted to $19.1m. A large-scale
reconstruction of Kievenergo's heating infrastructure was
performed, in total worth approximately $14m.
Occupational safety
DTEK continued the implementation of the corporate standard
for the individual safety gear. The total volume of project
investment in the reporting year amounted to $2.2m.
DTEK completed the certification of occupational safety management
systems to comply with OHSAS 18001:2007 at
the following enterprises: Service-Invest, DTEK PES-Energougol,
Mospinskoye, Pavlogradskaya, Kurakhovskaya, DTEK Dobropolskaya,
and DTEK Oktyabrskaya Enrichment Plants, as well as Socis,
DTEK Service, and Pershotravensk Repair Mechanical Plant.
The total volume of investment amounted to $21.8m.
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14 DTEK's enterprises completed the certification of their environmental
management systems to comply with ISO 14001:2004.
The total volume of investment amounted to $0.6m.
Focus points of the year
In 2011, DTEK's enterprises demonstrated significant growth
of their production indicators, compared to 2010.
10 DTEK Pavlogradugol, DTEK Komsomolets Donbassa Mine, and DTEK Dobropolyeugol.
11 The volume of electricity of Vostokenergo and Dneproenergo, with the latter being an associated company in 2011
(DTEK owned a 47.55% share).
12 The indicators of Service-Invest and DTEK PES Energougol summarized, excluding Donetskoblenergo.
The volume of coal mining by DTEK's mines 10 in 2011 amounted
to 22.9m tonnes, cumulative 11 power generation increased
to 33.0bn KW•hour, distribution – to 14.1bn KW•hour 12 .
The increaed production of all DTEK's enterprises resulted
from the implemented operational improvements, the ongoing
large-scale equipment upgrade program, as well as
the company's growth after purchasing the new assets.
In June DTEK created DTEK Neftegaz, a subsidiary company,
which will be responsible for oil and gas projects' development,
on land and in deep sea. The development of oil and
gas business will, in the long term, allow DTEK to diversify its
fuel base and to provide for the needs of its power generating
units fueled by gas and mazut (annual gas consumption
exceeds 3bn cubic meters). The company will also be drilling
methane from coal beds and gas from shale. DTEK has
been implementing the pilot projects in this area since 2007.
Currently, several mines of DTEK Pavlogradugol and DTEK
Dobropolyeugol are running methane utilization projects.
DTEK plans to launch the similar projects at the other mines
of the two stated enterprises.
In August, DTEK, Kiev City State Administration, and USAID
signed a Memorandum of Cooperation under the Municipal
Heating Reform Project, to improve the infrastructure and
the energy efficiency of the Kiev city heat supply system.
DTEK won the tender of the State Property Fund of Ukraine
for the sale of a 25% share in Kievenergo, having proposed
the price of $56.3m. As a result, DTEK controls a 71.82%
sharein Kievenergo.