Privatization of Electric Power of Serbia or entrance of foreign strategic partners into electricity generation?

12. June 2012. / Uncategorized

New government should bring new investors for electricity production or start preparing the privatization? Different opinions on future potential privatization of Electric Power of Serbia raised in Serbian public and political stakeholder arena brought different recommendations and conclusions. Full or partial privatization of some facilities and resources with shareholder division, with new potential owners or entrance of new investment strategic partners which will be coo-owners of some new generation facility, DSO or other asset within the Serbian Energy system. EPS is against even with minor share 49% privatization and says that new projects should be supported by the state.

Serbia do have a regional competitive position in energy regional market, its current mostly balanced electricity consumption and existing power generation facilities alow certain security for the country energy positioning. Being  a transfer route and hub for cross border trading is also a comfortable position.

Energy market reform, unbundling and liberalization have to be completed by 2015, electricity price and market conditions will change the positioning of EPS within the Balkans and Serbia itself. DSOs will have to act independently and more efficient, some smart grid and metering projects are initiated. Power gen facilities are modernized, many of them are planed to go out of network by 2020. Still new power generation resources as well as the investments into TSO and DSO levels are required and the state as well as EPS itself face challenges in financing all requirements. Electric Power of Serbia legally still manages power generation and DSO level, including the trading.

According to general manager of EPS Dragomir Markovic, EPS is completely against the privatization of EPS even the minority share package of 49%. The model in favor is the model EPS is using with Edison in construction of new power plant Kolubara, confirms Dusan Mrakic state secretary for energy. New projects, new tpp Kostolac and TENT B3 should also be managed in this joint venture project. Beside the benefits for national and local economy, their engagement would prevail in construction of this project, the state would get new facilities and remain in ownership structure with foreign partner.

TENT B3 project with new mine Radljevo would cost 2 bill euro and new Kolubara and Kostolac plants another billion euro.

Due to the crisis the construction of new power gen units is delayed but EPS have a product for which the buyers exist. According to projections for next 10 years, the demand will be increased along with price which means that the actual estimated value of of EPS which is 12 bill euros will increase also. This projections on demand side increase are also foreseen for all Balkan region.

At the moment due to the economical crisis on financial markets it would be hard to expect that the privatization could bring complete estimated value of EPS, 12 bill euros.

According to many state officials and stakeholders from Serbian energy sector, the priority for the new government should be the promotion and bringing of new investors into Serbian energy market. The investors would produce green incentivized kwh under feed in tariffs and might be interested in building new power plants with EPS.

The positioning of the new government regarding the country most valuable assets are yet to be seen.

Source; Serbia Energy Magazine

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