Turning PE EPS into EPS Joint Stock Company has been prepared, says Mr. Dragan Veljić, the director of EPS Head Office for legal and general affairs

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Turning PE EPS into EPS Joint Stock Company has been prepared – the decision of the Government of Serbia is being waited for – the Memorandum of Association of all companies within EPS is going to be changed in order to create preconditions for integral management in EPS. – Starting from the New Year, intensive activities of legal separation of distribution system operators and suppliers shall be initiated.

When the managing director of PE EPS, Mr. Aleksandar Obradović announced in November  that the Government of the Republic of Serbia by its conclusion accepted “Baselines for reorganization of PE  Electric Power Industry of Serbia“ and that the changes shall start from January 1st 2013, out of unspoken  wondering “whether  it is possible that after many years of pondering, analyzing, estimating, consulting and studies on possible organization and transformation of EPS, the changes can really occur so quickly”, there appeared the question what is supposed to be done in terms of standards so that EPS could begin with the New year. This was the journal edition subject of our conversation with Mr.Dragan Veljić, the director of EPS Head Office for legal and general affairs.

–       Managing Director, Mr. Aleksandar Obradović concluded shortly – said Mr. Veljić – what the precondition was for EPS to climb to “the green branch“ and becomes a successful company. After only two months we have got the encouragement from the government of Serbia to initiate the changes. In the meantime, we have submitted prepared documents for changing the legal form of the company to the competent ministry, i.e. turning the company to joint – stock company. These documents include the Decision on changing legal form of the company, the amendments of Memorandum of Association and Articles of Incorporation. If the Ministry agrees to the proposals of these acts, they will be forwarded for adoption to the government, and we are prepared to put these documents to effect, the very moment the government decision has been received. As far as we are concerned, it can happen even before the end of December.

How many previously prepared documents could have been used?

–       Unfortunately, we had to do the work all over again, since what was prepared five- six years ago, ended up as an idea. The political will was lacking to make the changes and to transform and organize EPS better. Today, the political will is obvious. It is reflected in the attitude of the management of EPS and in the Government Decision.

Along with the changes at the EPS level, there shall occur the transformation of other companies?

– The change of the legal form of the company is the main precondition for all future activities within EPS group that will take place in order to set the bases for the business unity of the system. Thus, this event will result in changes of Memorandum of Association of companies, providing EPS a.d. to exercise its unique management and control function in all companies. In addition, pursuant to the Energy Law, we are obliged  to prepare urgently the formation of two new companies dealing with distribution, one company as the operator of distribution system (ODS) and the other as the supplier which shall hopefully gain the status of public supplier (PS), and possibly backup as well. Activities on forming both these companies will be intensified from January 1st , in order for these companies to commence working from July 1st 2013.

How will new companies for distribution and supply be formed?

Firstly, the formation was supposed to be done together with changing the formation with separation, but we gave up on that. We are going to form two new companies, first, the company for supply, and secondly the company for distribution and management. One number of employees from existing companies for distribution will be included in those new companies. Only parts that are necessary for the operators’ work i.e. suppliers’ work will be separated and all other parts, and there are many of them, will be, as far as it is possible, organized as service companies for one or the other company.

Will those service companies stay within EPS?

– They will stay, of course, and will account for a very important part of the distribution and supply, since without them neither the new companies nor EPS will be able to carry out their basic operations in the supply of electric power to customers. Yes, they can keep their current names of their companies, such as “Elektrosrbija” or “Jugoistok”, for example, but it is essential that all the employees of these service companies should be employed within EPS a.d.

It all seems very complicated and elusive

– By the New Year, a lot of work awaits us, and everything is very complicated in all aspects, and  from legal aspect as well. We are not changing the legal form for the sake of the form, but to create the standards to change the essence and to strengthen the organization and operation of EPS, i.e. to prepare the business system to operate in an open electricity market, which will inevitably come. Thus, we are entering a very serious and complex process of consistent application of the new laws and assume the obligations set forth in EU documents, which will make us more competitive, at least in the region for starters. So, without making any fetishism of our work, lawyers are now challenged to  “iron out” , prejudge and anticipate  many things so that we are not late in the implementation of what may, at a given moment turn out to be very important. In this respect, our task is both complex and responsible.

It’s known that some laws are vague, and some in collision. How will you ’’reconcile’’ and avoid possible confusion?

– In this whole concept of this reorganization of EPS, it is essential to keep receiving full support of the Government of the Republic of Serbia, which would help us considerably by making appropriate changes or amendments to a number of laws, especially the Law on Public Property. Our idea is that the networks, which are public property, are made the property of the operator ED system, who would, in that case, have completely specified gravity and responsibility in the management thereof. Now, it is an open question. Other question is the amendment to the Law on Expropriation. Since the expropriation beneficiary, under the applicable law, can be a public company or a subsidiary that was established by a public enterprise, and EPS with the change of legal form will cease to be public enterprise, there remains the question of how subsidiaries of EPS will acquire land for Coal excavation or construction of a building. The third question relates to the business operations within EPS and the implementation of the Law on Public Procurement. Will there be any restrictions or not? Our proposal is that within the system of EPS a.d., the Law on Public Procurement should not be applied, and we will forward it to the competent ministry. Therefore, the solutions lay, above of all, in clear laws and by-laws.

Finally, whether and in what degree is the caution ’’may the cure make no harm’’ in place?

– Firstly, the thing here is not about the cure, but the inevitability to implement the laws and to enter new track, in which other, more developed and successful companies are placed. It is the essence of reorganization of EPS. Secondly, I would not dare to use the word ’’harm’’. This way, we make the conditions for EPS to get on its feet and to finally arrange huge and slow structures of this company, which has existed for years and for which we finally must admit it is as it is. We wish these changes had been initiated earlier. Today, EPS and all people in EPS would do better!

Unified management

– In the context of forthcoming changes, it is most important the fact that instead of Public enterprise, we will have a joint-stock company of ’’Electric Power Industry of Serbia’’. In addition, the Memorandum of Association of the companies will be changed, so that these companies are adjusted to unified management that will exist in EPS a.d. Along with all this, two new companies will be formed, performing activities of general interest, since they are the only that remain in the domain of governed activities, in accordance with the Energy Law  – Mr.Veljić pointed out.

Source; Kwh