Serbia: Power utility EPS accused for transferring World Bank loan to state budget instead of electricity imports

2. July 2015. / News Serbia Energy

The Fiscal Council accused the Electric Power Industry EPS of misusing the money from the World Bank loan. The loan of around seven billion RSD was paid into the state budget as non-tax revenue income.

In April, the deficit in the state coffers was by as much as 18 billion RSD lower than in the previous month, and such good result is mostly credited to the payment from the EPS amounting to as much as seven billion RSD. However, in the Fiscal Council, they suspect that the EPS has planted – a cuckoo’s egg. Instead of using the World Bank loan for purchasing electricity, in the “Electric Power Industry of Serbia”, they decided to pay the money into the state budget as revenue writes daily paper Novosti.

The experts from the Fiscal Council began suspecting because of the record high non-tax revenue that came from the address of our largest public enterprise in April.

– It is questionable whether the posting of the EPS payment as a non-profit revenue is in accordance with the international accounting standards – it is stated in the monthly report of the Council. – Namely, the claim from the EPS was created by the state’s repayment of obligations towards the Paris Club Creditors instead of this public enterprise within the period from 2012 to 2014. However, at that time, state deleveraging was recorded in the funding account, so the part of the installment that referred to the repayment of the EPS debt was not budget expenditure, nor was it included in the deficit. Therefore, the collected receivable should not be recorded now as non-tax revenue either, so the contribution of this payment to the deficit decrease should probably be excluded. Such adjusted deficit in April would only be somewhat lower than the last year’s.

In the “Electric Power Industry of Serbia”, the agreements on the formation of a single distribution company and on the incorporation of the seven companies for coal and electricity production into the Public Enterprise EPS were signed on Monday. – Today is a big day for the EPS, because the old way of EPS functioning is history – said the EPS director, Aleksandar Obradović. – All production companies have been unified under one roof, and all distribution companies have been integrated into one, which will enable the whole system to be better organized, more profitable and more efficient. By the signing of these agreements, the first phase of corporatization has been completed, by which the EPS will have only three companies instead of 14.

The second question asked by the Council is – where did the EPS get the money to pay these debts?

– It is not quite clear from which funds the EPS made the payment, considering the company’s solvency issues in the previous period and the weak business result in 2014 – it is added in the Fiscal Council. – It is also a fact that the state has recently borrowed from the World Bank with the aim of helping the EPS during the electricity import due to the reduced energy system capacity. The EPS withdrew around 90 million euros from this loan in April. We consider it economically unjustified if the EPS has paid a part of these funds back into the budget.

Milojko Arsić, a professor of the Faculty of Economy in Belgrade, believes that it will be hard to determine from where the EPS took the paid money.

– Banknotes are never colored – Arsić explains. – Therefore, we will probably never find out from where the EPS took the money to pay into the budget. It is also possible that they paid this debt from commercial loans, because, since the beginning of year, they have raised the loans worth 120 million euros for liquidity, i.e. to pay the liabilities towards suppliers. Therefore, it will be hard to prove the misuse of funds. However, by no means could this payment come out from the EPS as revenue, that is pure manipulation.

This year, the EPS will not pay a single penny into the budget, because they finished the year 2014 with a deficit of 32 billion RSD or around 260 million euros. The greatest loss was made due to the floods which hit Serbia last year and “took away” half billion euros from the state’s energy system. , transmits Serbia-energy.eu

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