Are public energy companies going to ruin Serbian budget?

The Electric Power Company of Serbia (EPS) has made losses of one billion euros since last fall, mainly on the account of import of expensive electricity, and the company’s losses will continue to accumulate this and next winter, it was assessed today at the conference titled “Will energy companies set the (state) budget on fire?” which was held in Belgrade.

The conference participants also said that no one knows what the energy situation will be like during the winter as it also depends on international circumstances considering that Serbia is integrated into the European power grid, which is in big trouble.

The majority of domestic heating plants, 66 of them, submitted a request for an increase in the price of heating from 2 to 36%, and they will not hesitate to turn to their founders, that is, municipalities and cities, to cover the losses.

Member of the Fiscal Council, Nikola Altiparmakov, assessed that EPS is no longer a risk for public finances, but that it has become an expense, and that the state has paid two billion euros for energy companies and gas price increases since last autumn.

“Serbia will cover the expenditure by borrowing which could mean that there won’t be enough funds for other purposes like improvement of education which is quite bad in Serbia and financing of other vital functions (of the state),” he warned.

Speaking about the new budget review, he pointed out its lack of transparency.

“We have had an insufficiently transparent budget for a couple of years with the state borrowing a total of 1.2 billion euros. We indirectly concluded that this money went to public energy companies, although that is not written explicitly in the budget. It is very important and also problematic that we don’t know to which energy company and for what purposes (the money has been allocated),” said Altiparmakov.

A loss of one billion euros

He stated that since the accident last autumn, EPS has made losses of one billion euros, mainly for the import of expensive electricity, and it will continue to make losses this winter and next year because it will not be possible to repair the problems that have arisen or have accumulated over the years.

“A series of problems happened at the worst moment when there was a sharp jump in the prices of goods and services and crashes on the energy market. Crude oil price jumped five-six times in 12 months, gas price went up 36 times, looking at the peak price after the Nord Stream stopped functioning,” the World Bank’s Chief Economist for Serbia, Lazar Šestović, said.

He also said that it should be determined who is responsible for the accident that happened in EPS because Serbia must not get into the same situation again.

“Corridor 10 cost a little more than one billion euros to build so the costs incurred by EPS were tantamount to building an entire new motorway,” he added and warned that EPS must be operationally put on a sound footing, capacities must be renewed, and the state and EPS must be more transparent.

(Biznis i Finansije, 09.11.2022)

This post is also available in: Italiano

Share this post

Leave a Reply

Your email address will not be published. Required fields are marked *

scroll to top