Ukraine Power Company Boss Detained Over Botched Coal Deal

The head of a Ukrainian state energy firm has been detained on suspicion of embezzling funds after a botched deal to buy South African coal deepened the country's electricity crisis, prosecutors said on Friday.

Without Russian natural gas imports since June and hit by separatist violence that has disrupted its own coal mining, Ukraine has been forced to introduce mass electricity cuts.

To help keep coal-fired power plants operating it turned to South Africa for one million tonnes of coal and received three deliveries before supplier Steel Mont Trading halted supply in November citing concerns about Ukraine's instability.

The director of energy firm Ukrinterenergo has been detained by Ukrainian investigators over his involvement in the deal, the prosecutor general's office said in a statement, which did not provide the director's name.

A spokesman for Ukrinterenergo confirmed the director had been detained and named him as Volodymyr Zinevich.

A preliminary investigation had found he had "knowingly signed a contract with the company Steel Mont Trading to acquire coal ... which on its own was unsuitable for use," the prosecutor said.

The price of the coal soared to $134 per tonne from an initial $86 because of repeated amendments to the contract, it said. Steel Mont Trading declined to comment.

Ukraine's state electricity provider said on Friday it had introduced limits on electricity consumption between the hours of 8 a.m. and 11 a.m. and from 4 p.m. to 8 p.m. mostly due to low coal stocks at power plants.

Energy Minister Volodymyr Demchyshyn said on Friday there was a "tense" situation at the country's power plants with coal stocks running so low at some that they are not able to produce the required amount of power.

The collapse of the South African deal forced Ukraine to look to Russia for coal to get through the winter, but Demchyshyn said those deliveries were beset by delays resulting in 500 wagons of coal being held at the border.

Reporting by Pavel Polityuk and Alessandra Prentice, additional reporting by Natalia Zinets