Ukrainian utility to sell 5m ERUs in tender
At least 4.75m emission reduction units (ERUs) are to be auctioned off by Ukrainian integrated power producer DTEK, according to documents that appeared on the company's website on Tuesday.
Dutch bank ING - which does not run its own trading book, but manages carbon portfolios on behalf of clients - will have pre-emptive rights to 200,000 of the ERUs, as part of a deal struck last December.
A source from the bank's carbon team declined to say whether the bank would take up this right, but told ICIS Heren: "We have done some interesting business with DTEK in the past, and there is no reason not to consider doing the same in the future."
A source from Citigroup, another bank active in the ERU market, also hinted that it was considering taking part.
Both track I and II
The ERUs are to be generated by upgrades at three different power plants (located in Luganskaya, Kurakhovskaya and Zuyevska) by 2012.
A company spokesman said it was too early to say when the ERUs would be delivered: "We haven't even set a firm deadline to select a winner yet."
Two of the projects are taking place under the track I procedure, which means the Ukrainian authorities will issue the ERUs. The third - and smallest - project will be implemented under the track II procedure, putting the UN in charge of issuance.
The tender documents set out that 2.4m ERUs are expected from the power plant at Luganskaya, with 96% up for sale (2.3m). This estimate included volumes from 2006 and 2007, before the joint implementation (JI) mechanism was in place. A spokesman for the company was unable to explain this on Tuesday.
Discounting the 2006 and 2007 volumes, 1.7m ERUs were expected from the Luganskaya project over the Kyoto period between 2008-2012. A total of 1.6m of these would come up for sale.
The Kurakhovskaya project was expected to provide 2.0m ERUs (1.9m up for sale), with a smaller amount of 0.7m (0.6m up for sale) stemming from the Zuyevska plant.
Companies have until 19 March to submit their tender offers, either as outright prices or linked to the settlement of daily futures at London-based exchange ECX.
All three projects are handled by Vostokenergo, DTEK's power-generation division. IS
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