Serbia: World Bank is suggesting strategic partner for EPS

, News Serbia Energy

Country Manager of the World Bank in Serbia Tony Verheijen said that since the privatization of state-owned power utility EPS would be too complicated, it would be best that Serbian Government consider strategic know-how partnership for the company.

Verheijen recalled that even after financial consolidation in 2016, EPS still recorded losses, neither did it cut costs nor reduced the manpower. Due to huge losses the World Bank proposed 3.8 % electricity price increase. At that time, lay-offs and cost reduction were agreed upon. But, Verheijen believes that the company is currently working according to the plan and announced that major status assessment will take place in July this year. On the basis of those data, World Bank will adopt financial model for EPS for the period until 2019 and recommend it to the Government.

After the assessment in July, the final decision will be reached whether the price of electricity should be increased. In 2016 the World Bank Office already expressed their stand that it should rise annually during next two years. Regarding the privatization, he said that strategic partnership may be the best option for the company, and with good management in place EPS would have positive impact on Serbian economy in general. However, the World Bank will not insist on that option and it is up to the Serbian Government to decide how to proceed.

On the other hand, President of EPS’ Supervisory Board Branko Kovacevic believes that strategic partnership is not a good idea and he is strongly against it, stating that EPS is not be managed by somebody who knows nothing about it, noting the case of steel mill in Smederevo, where foreign management only made new debts. Kovacevic said that EPS could be listed at the stock exchange after capital assessment. In the first round it could become an enclosed-type of joint-stock company, which is likely to happen by the end of 2017, and only then one could discuss different types of cooperation, where somebody invests capital and profit is shared.

Regarding the increase in the price of electricity, he noted that EPS is already doing business on a free market and has several hundreds of large commercial consumers who pay market price and warned that higher electricity prices would enable other electricity producers to take over the market and shut down competition.