Serbia mining:Return the reputation by instituting legal proceedings against the responsible persons, Interview with Zorana Mihajlovic PhD Minister of Energy

14. October 2013. / Mining

The Minister of Energy, Development, and Environmental Protection, Prof. Zorana Mihajlović PhD, has exclusively spoken about the arrests made in MB “Kolubara”, strategic development, but also about new technologies and their impact on the Serbian energy future.

In the last two years even three Directors of the MB “Kolubara” were arrested, as well as a great number of their closest Assistants. In what way do these arrests affect  the reputation of EPS and “Kolubara ?

The arrest of  the former “Kolubara” leaders means that the prosecution service and the Police are finally doing their job. As long as the investigation is in progress, there is still the possibility that there are more persons involved in the scandals connected with this company. However, it is not the job of the politicians and executive authorities to speculate on this matter. Therefore, I do not understand the attitude of Mr. Dragan Đilas, who, criticizing the Government, actually puts pressure on the judical system, and in doing so, prevents  shedding some light on the theft committed in “Kolubara”. Everyone who can put two and two together, must realize that the millions were paid out for the land expropriation to the people who were neither in the first nor in the second zone of expropriation, which means that they would not be relocated in the next seven to eight years.

The persons who allowed millions of dollars to end up in the pockets of their suspicious business partners are the ones who should have thought about the reputation. Unfortunately, “Kolubara” is not an isolated case, because Serbia is full of state-owned companies in which the business was not run in a proper manner. Prosecution of those who were working illegally and the bringing large economic systems back to the legal framework of doing business, will be, in my opinion, the best way to rehabilitate their rocky reputation.

Are the Government officials and management structure of the time are also to be responsible for the failures of this company? Why have not they been  investigated by the Police yet?

I have no doubt that the responsibility should be borne by  all those  who were involved in the embezzlement of  “Kolubara”, or knew about it, but did nothing to prevent the theft. In this and every other case, when it comes to robbing Serbian citizens, nobody must not be protected, no matter what party they belong to, and whoever appointed them at those positions.

It must never happen again that the people who abuse their authorities for personal gain  decide about the money of Serbian citizens.

Maybe it wouldn’t have happened if EPS had been privatized. Will the adoption of the Energy Development Strategy in Serbia by 2025 speed up this process?

I have said on many occasions that the Government is not considering the privatization of EPS, but that for some projects, we will try to find strategic partners. In Serbia, the conditions for public energy enterprises must be created  first for  their independent and successful  operation in the market, and to be able to use their own income to make investments into the development and environmental protection. The prerequisite for this to happen is to complete the process of corporatization of EPS, which will allow to the company to become more efficient and in capacity to deal with the competition.

Adoption of the Energy Development Strategy in Serbia until 2025 will resolve many dilemmas. How is the public hearing on the draft of this government’s document progressing?

The draft has been presented in Novi Sad, Niš, Kragujevac and Belgrade until now. Experts and the general public will give the final judgment on this document at the meeting, to be held on 11th October in Belgrade.

Strategic directions of the  development include the construction of new energy facilities, the development of the national and regional energy markets, greater utilization of the potential that lies in renewable energy sources and the increase of energy efficiency. In the field of electric power industry, the strategy envisages that by 2020 we will have at least 2,000 megawatts of new capacities, including thermal power plants, hydro power plants and renewable energy sources. The construction of new storage capacities is planned in order to make the required reserves of oil and oil derivatives. One of the priorities will be the optimal use of the gas pipeline “South Stream” and the interconnections to Bulgaria . Changing the structure of consumption in order to spend more energy in the economy and industry and less in households, is also an important task.

When will the last version of the new strategy be adopted?

While the public debate is on, the Ministry is preparing the drafts of the Action Plan. I expect that everything will be completed by the end of this year. The Action Plan is a binding document and it will have a precise time period. The scenario with the TPP “Kolubara B” cannot happen again. This TPP should have been connected to the network in 2007 according to the plans, and its construction has not been completed yet. We must not allow any gap between the construction of new power plants and the development of the mines  neither, as it was the case a decade ago.

Will EPS be exposed to great tests in the next two years?

The big test for the EPS will follow in a few months, on 1st January next year when more than 4,000 companies will be in the free market, because then, EPS will  have to fight to keep its customers. Since the beginning of the year 2015, the households will also have the possibility to choose their suppliers and therefore the financial, organizational and technical state of EPS in that moment will be very important.

Therefore, I have been insisting for a long time now, on solving problems of  queues at the counter windows, of enabling regular payers to pay  their bills when it suits them, not EPS, and that owners can reschedule their debts. EPS must get ready for open market competition much faster. The scenario of  late public supplier formation must not be repeated, in order to avoid  the total chaos with the bills, and that consequences are borne only by the consumers in the end.
If the workers in mines and thermal power plants, working under much difficult conditions, manage to maintain or even increase production levels in the winter months and to provide enough energy, I see no reason why the companies for the distribution and supply of electricity shouldn’t show the same responsibility. I’m glad that the Management of EPS decided to analyze all these omissions and determine the responsibility, but it would be much better if  EPS had been ready for the beginning of the public supplier work.

At this moment,  Serbian energy production is based on so-called ” dirty technologies ” . In what way and to what extent will the new Energy Development Strategy enable greater investment in the production of pure and renewable energy?

We can significantly reduce imports and increase energy security of Serbia by using the renewable energy resources, which is why the renewable energy is one of the priorities in the new strategy.

Investors have a complete idea of  the ambitions of the state after the adopting of the National Action Plan for Renewable Energy at end of June , which have clearly defined goals and time frame for achieving the 2020th year. In the past year , completes the legal framework , as adopted amendments to the Energy Law , Regulation and the four model contract to purchase power from the privileged producers . This has created the conditions for what we have so far been only a potential start to turn into real investments . Improving regulation and greater transparency in the procedures are recognized by investors , which shows nearly 1,500 applications for the first public call for the construction of small hydro power plants on the basis of which has been signed 212 memorandum to potential investors and local governments.

What is the situation with complicated procedure?

The second phase of simplyfing the procedures for obtaining all permits required for investing in OIE is ahead of us. We are working with European bank for reconstruction and development on this task. In the first phase, we have recorded the institutoin and procedures, which affect the time for permits obtaining. In the second phase we will strive to change regulations and make the job easier for the Investors.

Naturally, in all that, we take care of both the interest of the Investor, and the interests of the State and the citizens who are paying the price so that Serbia could get higher percentage of “green energy“ in the final consumption until 2020. It is our obligation to provide a steady, predictable legal framework for investments and for the institutions to work efficiently, but we cannot take all the risk of a project, which some Investors attempted to work out by ways of lobbying and putting pressure.

Kosovo-Metohija Coal Basin contains as much as 76% of total Serbian coal reserves. Could the recently signed Energy Agreement between Serbia and Kosovo affect the question of ownership of those coal reserves, and in what way?

Brussels Agreement on the energy does not comprise the issues of property, therefore not even the ownership of mineral resources in Kosovo and Metohija. Regardless of that, these negotiations required a lot of courage and readiness to agree to compromises which were not easy, but they were in Kosovo Serbs’ best interest. The most important thing for us is that we have provided the stable electricity supply at the North of Kosovo and Metohija, since we had the problem with electricity supply every year, and it almost reached the level of humanitarian disaster. At the North of Kosovo and Metohija “Elektrokosmet” will become the electricity supplier and distributer, thus we will secure its legitimacy and reliability of supply.

Source; RBK magazine

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