Serbian monopoly power utility company EPS ( Elektroprivreda Srbije) has lost several hundred millions of EUR because of delay in forming the EPS Supply Company that will do electricity supply in Serbia instead of five current distributions since 1 August. Establishment of EPS Supply Company represents a part of EPS’s reconstruction in accordance with Energy Law and conclusion of Republic Government since 16 November 2012 what is pre-condition for electricity price increase and this price has not achieved real market level in Serbia yet.
Delay happened because EPS’s Director Aleksandar Obradovic couldn’t agree with directors of 5 electric distributions about that how Supply company and its relation with 5 DSO companies supposes to look like and which powers will be transferred to the new company. Therefore, request for electricity price increase was sent to Energy Agency on Monday what means that if it is approved, the decision for price increase can be enforced on 1st August- our source from the EPS’s top that wanted to stay anonymous stresses.
He adds that calculation is simple- EPS Supply and five distributions are asking from Energy Agency electricity price increase of 10,9 percent and that request is sent and approved 6 months ago, EPS would cash in several hundred million EUR more. Our interlocutor stresses that very little have been done on company forming so far i.e. only director was announced.
EPS’s Managing Board has nominated Dejan Vasic, new director of the new company “EPS Supply” after what conditions for launching procedure of company assignment in Agency for Industrial Registers. Vasic is the only one employed in the company that shall start to charge electricity of all consumers in Serbia at the moment. He shall start to form organization structure during next week i.e. decision which cadres from electro distributions and other EPS’s parts will go into new company. So reconstruction process is being processed very slowly because distributions are not ready to give up “piece of cake” when it comes to charge while Director of EPS, Obradovic supports the idea to work from one center, new company EPS Supply.
Directors in distributions think that EPS CEO idea to consider only electricity transfer network as “disempowerment” and they claim that this process supposes to develop gradually. Therefore, besides EPS, directors of distributions are also guilty because they hinder the whole process in order to keep as much power as possible. Their attitude is supported by leadership’s part in EPS that believes that they should not go into sudden changes.
Many technical stuff need to be resolved, for example where bills will be paid and who will send them to the citizens and there is a little time until 1st August to do that, not only physically but also administratively . There is also a legal confusion if consumers should sign new contracts, identical to the ones they have signed with distribution, with EPS Supply or the whole thing will progress automatically, situation is pretty unclear because EPS thinks that everything will go automatically but there are other opinions in the scope of the company.
Except for these dilemmas, EPS can be seriously pushed by other “stricter” terms. The fact that 8.000 firms in Serbia will have right to buy electricity at free market in the scope of liberalization does not go in favor to delayed establishment of the new company. Is only 5 months enough for reconstruction and nothing was done in the last seven years despite knowing what is going to happen. For example, electrical power utility in Croatia, where complete market liberalization is present, lost the right on electricity supply to 35 ministries and offices of national administration on tender from Slovenian Company GEN-I last month.
Profitable
Directors of 5 distributions are asking a status of local operators for start in order to be able to charge next to EPS.
This is a big battle for electricity charging. This is the most profitable part of business because operator can decide whom he will tolerate debt to and whom he will offer longer term for payment of previous bills and who can’t count on it- our interlocutor says.
Who will profit
-If our public company EPS Supply is not completely ready on 1 January, we wonder if it will be able to confront big foreign and domestic electricity traders that are only waiting to enter our market. From the citizens’ point of view, considering that EPS is public company, it is better for it to get those businesses because the part of profit will go to national budget. There will be some income in conditions of market electricity prices and the question is who will profit- our interlocutor concludes.
Source; Danas/Serbia Energy
