September 18, 2017 / 2:03 PM / a year ago

UPDATE 1-Ukraine's DTEK says power output, import contracts at risk if tariff not raised

(Adds impact on import contracts, quotes, data on volumes)

By Alessandra Prentice

KIEV, Sept 18 (Reuters) - The head of Ukraine's largest private power and coal producer, DTEK, said the company may have to halt production at one of its power plants or suspend import contracts if the government does not raise tariffs to account for expensive anthracite imports.

Pro-Russian separatists seized control of DTEK's anthracite assets in early 2017, forcing the firm to cover its needs with imports from South Africa and elsewhere.

Chief Executive Maksim Timchenko said imports cost around 2,500 hryvnia ($96) per tonne, while the tariff paid by the state regulator equates to 1,800 per tonne.

"If the tariff doesn't change, we can expect a shortage of anthracite over the winter. We have three power stations using anthracite. One of them could be affected - stocks could run out and the power station could stop running," he told journalists on Saturday, referring to DTEK's Krivorozhskaya plant.

"We are in a situation that we should suspend our import contracts until we have the real price reflected in the tariff. The last two months our margin has been going down," he said.

This year, DTEK has been buying South African anthracite through a deal with mining giant Glencore and has also used supply from its own mines in Russia.

Timchenko said DTEK had the option to increase its Glencore contract to 1 million tonnes from 670,000 tonnes and could also buy from Russia or the United States.

"We know we can import the required volumes, but the question is whether it's economically viable," he said.

In the first half of 2017, DTEK bought 655 million tonnes of anthracite from abroad. It will need to buy another 1.5 million tonnes by the end of the year, Timchenko said.

He said he expected DTEK would need to buy 2.5 million tonnes of anthracite and 0.5 million tonnes of G grade coal from abroad in 2018.

$1 = 26.1100 hryvnias Editing by Mark Potter

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