From 2024, Elekroprivreda Srbije (EPS) will probably become a profitable company, the Fiscal Council states in its assessment of the budget proposal for 2023. Even then, the EPS will remain a permanent risk for public finances if the foundations of the reform are not immediately started, warns the budget assessment.
The EPS loss in 2022 could amount to 850-900 million euros, and the Fiscal Council predicts that the loss in the next year could drop to around 300 million euros, which will still have to be covered by budget interventions.
EPS should have less losses by the next year due to the increased price of electricity and the expected higher production from hydroelectric power plants, due to the fact that the drought of 2022 is not expected to repeat.
EPS will no longer need large-scale electricity imports until the new mine opens in the Kolubara Basin, which will be in 2024 at the earliest.
Therefore, it is expected that EPS will be able to make a profit in 2024, because it will reduce the cost of imports, and will maintain the increased selling prices of electricity.
However, increasing prices and opening a new mine alone will not solve EPS’s problems.
Lignite, on which the production of EPS is now based, is an unsustainable energy source in the long term, and the increase in company income due to a higher selling price can easily be spent on irrationalities within EPS, warns the Fiscal Council.
The Fiscal Council has previously emphasized that the budget costs for EPS are the result of primarily the disastrous management of this company in previous years, and not the world crisis.
The main reason why EPS cannot currently operate without financial assistance from the state is that “almost unbelievable mistakes” in management have led it to a situation where it is no longer able to meet domestic needs with its electricity production, according to the Fiscal Council.
Energy companies EPS and Srbijagas represent the biggest problem of Serbia’s public finances, according to this advisory body.
Only for the next year, the direct budget cost for energy investments is planned at the level of around 1.2 billion euros.
In addition, the budget opens the possibility for new borrowing by these companies from state guarantees in the total amount of up to one billion euros, which will probably be a future budget expense.
Expenditures for energy companies make up half of the projected fiscal deficit in 2023, Nova Ekonomija reports.