Serbia: Financial crisis of power utility EPS

3. June 2015. / News Serbia Energy

The losses of state power utility company EPS Elektroprivreda Srbije reached as much as 800 MEUR, and it is in addition of already taken loan of one billion EUR. “Electric Power Industry of Serbia” will take far more than alleged cutting of 300 directors to cover the loss of a whopping about 800 MEUR, which was found to have the latest financial report.

Together with the assignments, which also reach around a billion euros, this state-owned company soon will not be able assets to cover the growing hole in the business.

Executive salaries

While the public is revolted by information that 43 removed EPS directors still continue to receive managerial salaries without the namesake functions, it is for the first time publicly accessible information about the company losses or its businesses. It has been manipulated over years in what situation EPS was, individual managements have depicted profit, but many years’ hostile business and maintenance of the unreal low electricity price emerged now due to the reorganization writes daily Kurir.

EPS, with its 13 companies do not receive any money from the budget, but that moment is closer because the deficit of 800 MEUR somebody will have to pay someday.

As part of the reorganization, four new EPS distributions will affiliate to the “Elektrodistribucija Beograd”, and all manufacturing companies will be united into one, while “EPS Supply” will continue to operate separately as before.

In EPS state that the reason for the loss are market, price, credit and currency risk, as well as limited ability to control these risks, and add that over the past eight years EPS donated six MEUR to citizens and businesses by selling electricity at a price significantly lower than the market one.

– After the measures implementation undertaken by the Government for financial consolidation of EPS group, it is expected that we will operate with profit in the coming period, which will be directed, with the agreement of the Government of Serbia, on covering the reported losses – as stated in EPS.

Fight over budget

Local economist Ljubomir Madzar says for Kurir that the EPS have to wrap lack over budget. EPS will have to maintain the facilities and construct them, and there is no money, so it will have to borrow it. It will not get loans without government guarantees and it will not be able to repay it alone, so the state will have to do it as a guarantor of the budget.

– It has long been known that EPS is in dubious financial position, even when it showed a profit and paid into the budget – he adds.

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