AD ESM signs three-year coal supply agreement with Kosovo's KEK for Obilić mine

AD ESM has signed a three-year strategic agreement with Kosovo’s state energy company KEK to secure supplies of high-quality coal from the Obilić mine, the company announced.

The contract follows intensive talks between the two state-owned firms and is based on a decision by the government. According to AD ESM, the deal is intended to ensure stable and continuous deliveries of coal needed for electricity generation.

AD ESM said: "AD ESM received a concession in the Obilić mine and the opportunity to exploit about three million tons of coal in the next 36 months. The contract was officially signed by the general director of AD ESM, Lazo Uzunchev, and the general director of KEK, Gramos Hashani. The partnership foresees a guaranteed and fixed price of 24.4 euros per ton of coal for the duration of the contract, with precisely defined quality parameters that will be the basis for the sale."

Expected production, revenues and emission effects

AD ESM says the arrangement will protect the domestic energy system from shortages of quality coal and from the frequent and sharp swings in international fuel prices. "Burning Kosovo coal will significantly increase the efficiency of the thermal power plants. This will directly bring an additional annual output of 800 gigawatt hours of electricity and revenue of around 57 million euros. The financial effect will be further improved by savings from reduced need for fuel oil during combustion. At the same time, the state will gain indirect environmental benefits and financial savings, with an annual reduction of CO2 emissions by 923 000 tons due to less coal burned and by another 55 980 tons due to reduced use of fuel oil. Considering that about 70 percent of total annual electricity production currently, and for the next three years, will come from thermal power plants, by signing the contract AD ESM provides relatively long-term energy security and stability for citizens and industry," AD ESM added.

AD ESM's director, Lazo Uzunchev, said a public tender will be announced no later than the end of August to select an economic operator to carry out excavation, quality analysis and loading of the coal at the Obilić mine, as well as transport, freight forwarding and unloading at TE Bitola and TE Oslomej over the next three years.

Company officials emphasised that securing a fixed-volume, fixed-price supply from the Obilić mine is intended to stabilise fuel input for Macedonia's thermal fleet and reduce exposure to market volatility while contributing to higher plant efficiency and lower fuel-oil consumption.

Photo: AD ESM