Serbia: Why did Serbian power utility EPS lost Messer as big electricity consuming client and why Gen-I stepped in as supplier?

18. June 2013. / News Serbia Energy

At the beginning of 2013, the company “Messer Tehnogas” attracted public attention when it became the first industrial consumer that terminated cooperation with EPS and opted for other electricity supplier. Ernst Bode, CEO of “Messer Tehnogas”, said that even though this company has been operating in Serbia since 2000 (however, with some interruptions), he is still confused by the inefficiency and obstruction in administration, as well as by the absurdity of certain regulations.

Speaking about the termination of cooperation, Bode says that one of the reasons was the unplanned increase in electricity price of January 1, 2013, when EPS, under the pretext of the liberalization of electricity market in Serbia, increased the price of electricity for the industrial consumers at high voltage level by almost 70%. His company was among a group of 27 consumers largely affected by this decision. Bode emphasizes that, for two months, they were trying to warn of possible negative consequences that an extreme price increase could have on the Serbian economy and asked for a gradual price increase in order to prevent electricity price shock on the market as well as to give some time to the affected companies to adapt to new circumstances, but they came up against a brick wall. Therefore, they decided to take the risk and be the first company in Serbia to choose, instead of EPS, other supplier of electricity because the company “Gen-I”, an energy trading company, had offered a better price.

Bode says that this decision turned out to be just right and that the “Gen-I” has proved to be very fair, competent and flexible partner. However, as he points out, despite the fact that, unlike the other 26 companies, they took the opportunity to purchase electricity from other supplier, they still experienced a price increase of over 50%, which will certainly have an impact on the business results in 2013.

Considering the current situation, Bode wonders how it is possible that the company operating in the energy trading sector could offer a better price than the producer of electricity, and why the ministries in charge haven’t done anything to protect and support the industrial sector during the crisis. He says that the electricity at high voltage in Serbia is now by 30% more expensive than in more developed and competitive economies like Germany.

Therefore, despite the fact that he is sincerely pleased to hear that the vast majority of German investors and other investors are satisfied with results of their investment in Serbia, Ernst Bode wonders what would have been the results of a survey if the price of electricity for all companies had been increased by almost 70%, or if they had been forced to pay by 30% higher price of electricity than in Germany. He points out that the new price of electricity concerned only 27 companies, of which only “Messer Tehnogas” is German company. He also states that most of the companies hit by the price increase, which is, in comparison to other countries, a small number of high-voltage consumers and that fact for itself colorfully speaks about the state of the Serbian industry, are still a healthy part of the Serbian economy, regularly settling their obligations to EPS.

According to Mr. Bode, “Messer Tehnogas” was trying to explain to EPS that such an increase in price would lead to further weakening of the Serbian economy, shifting the burden of its illiquidity to only 27 companies. In the interview for “Vreme”, Ernst Bode says that it is very frustrating, when you want to move forward and have plans for development, to often feel so constrained by completely inexplicable behavior, incomprehensible laws or absurd and outdated regulations.

Source;Vreme/Serbia Energy

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