Serbia: Power utility Elektroprivreda Srbije EPS business results 1H2016

, News Serbia Energy

Good business results achieved in the first half of this year in Electric Power Industry of Serbia (EPS) are explained by the applied savings measures, while expert public claims that it is about the beginning of reforms that are still taking too long, though it praises better operation of EPS.

– The success of reforms and savings measures in EPS reflected in a profit growth for the first six months of this year, to more than EUR 105.54 million. Net profit of the largest energy company in Serbia was EUR 81.2 million higher than in the first six months last year and about 4.5 times higher than planned. In the first half of 2016, Electric Power Industry of Serbia has paid EUR 378.3 million to the budget of Serbia on behalf of profits, taxes, excise taxes, contributions, fees and charges – said source from EPS to daily “Danas”.

– Improvements in almost all areas have been recorded. Increased efficiency and better organization have enabled savings to reach EUR 112 million in half a year. EPS will continue to cut costs and improve its operation – states EPS.

It is pointed out in that company that more efficient operation has been achieved in all areas, but the greatest savings of about EUR 48.7 million were made with a small engagement of third parties and reduced costs. Centralized procurement system has contributed to reduction of cost of materials, fuel and maintenance. Good financial results were followed by production success. Electricity production is higher by 7.7 percent in relation to plan, coal production is in line with the plan. Excellent results are recorded in profit so that the collection rate for the electricity was 95.27 percent in the period from January to June 2016.

Professor of the Faculty of Economics in Belgrade Ljubodrag Savic told to daily Danas that he welcomes the achieved operating results of EPS but notes that there are still many problems in this company that should be dealt with.

– Each step forward is welcome, but unfortunately reforms in EPS are still at the beginning and slowly taking place. For example, to produce one kilowatt-hour of electricity in the Czech state company CEZ twice less workers is needed than in EPS. This shows that CEZ has twice higher productivity than our power company. In addition, EPS is still suffering great technical losses, unpaid receivables are still high, around one billion euros as per my information and the number of directors is only symbolically reduced – said Savic.

According to him, reforms in EPS cannot be duly implemented by providing generous severance pays to employees who will be made redundant.

– In fact, this severance pay will stimulate workers in production to leave the company and, thus EPS will be faced with the acute labor shortage in the future. This is quite wrong. Excess staff should be found in the administration where numerous staff from ruling parties have been employed and not let go the people who work in production department and create shortages that will not be recoverable. The modernization and construction of new production facilities in EPS is necessary in order to reduce technical losses and the Government being the owner of the company should take care of this issue. In addition, conducting social policy by placing the burden on EPS should stop. It could be tolerated that debts are forgiven only to poor people who really do not have enough to pay the bills, however it is incomprehensible and totally unacceptable that rich people and companies are among the electricity debtors – says Savic.

Mahmud Busatlija, a foreign investment expert says it is very possible that EPS indeed has achieved good results and that the figures presented in the public are authentic.

– Due to favorable weather conditions, and the fact that there were no disasters as in 2014, as well as owing to certain savings and more responsible operation after the dismissal of previous general manager, it is completely realistic that ESP managed to achieve better operation compared to the same period last year. However, that does not mean that the reform process in EPS is completed, but on the contrary – it is on the very beginning and there is much more to be done. True reform will not be executed if certain measures are not performed to ensure its implementation. Primarily, it is about the implementation of financial consolidation of the company which is the basis for all other moves that should be withdrawn so that EPS could enhance its operation – concludes Busatlija.