What does electricity market liberalization brings to Serbia, what about big consumers?

20. February 2013. / News Serbia Energy

New electricity price that EPS will be paid by big industrial consumers presents more that 60% of price increase. Market liberalization is necessary to adjust Serbian market to the EU laws is only an excuse for drastic price increase and covering the EPS’s inefficiency.

Electricity market liberalization refers to 27 big industrial companies since 1 January this year, high-voltage consumers that have lost right to a regulated price and they’re forced to accept the new price offered by EPS “in accordance with trade conditions”. Seven corporations have sent several applications and requests to Ministry of Energy, Finance, Industry, Energy Agency and EPS, after the first EPS’s offer in December 2012, to ask if price increase can be carried out in the phases so to avoid extremely high expenses in these industries, price shock and chain reaction of price increase on market.

The consumers expressed their dissatisfaction to the fact that despite the market is liberalized there is no other electricity supplier that can offer full supply except EPS, so the open market is a only a farce, it is a possibility for EPS to form prices according to its own will, and not paying attention to consumers’ financial situation.

8 of 27 companies are in reconstruction processes. They don’t pay electricity and they mustn’t be cut off, so EPS refinances its losses with the rest of liquidity companies that settle its liabilities on time, do business in Serbia, employ workers and present a part of foundation of our industry and potential for its further development. They don’t have other choice but to accept EPS’s offer. Healthy, profitable companies will easily find themselves go bankrupt, closing current manufacture or move it to areas where business on long-term is possible and where decisions are not making to damage, but to help industry. This discrimination shows to the future investors what they can expect if they decide to start business in Serbia.

Electricity price in European countries is generally lower to energy intensive industries like steel mills, chemical and petrochemical complexes, copper and aluminum producers than to households and that stimulates industry and encourage development of new businesses and investments. The stories about the cheapest electricity in Europe are not valid anymore. Kilowatt of electricity for big consumers in Serbia will be more expensive that kilowatt for industry in developed European countries that had time for adjustment. This will harm our bad and fallen industry additionally and will contribute to the loss of one rare advantage that Serbia had, ability to attract foreign capital. Companies hit with this price increase will try to transmit these prices to its buyers on domestic trade or they will terminate manufacture in Serbia.

On the other side, Elektroprivreda Srbije will remain without customers and they will sell electricity to foreign buyers, according to trade rules where kilowatt is offered at lower price than in Serbia. So, additional value will be accomplished in other industries instead of stimulating development of domestic economy, and Serbia will import products at much higher prices than those if they were produced here. Medias reported the statement of Zorana Mihajlovic, Minister of Energy, that electricity price increase will be in two phases, but that didn’t happened.

Lack of understanding among authorities and EPS, lack of sense for industrial problems, as well as absence of will to find appropriate solution that will satisfy both sides have driven to a feeling of fraudulence and disappointment among big industrial companies and investors that didn’t succeed to make this situation more acceptable and to indicate drastic consequences of authorities’ decisions. Optimistic forecasts of industrial manufacture growth, BDP growth and citizens’ standard growth, as well as transcendence of crisis in 2013 won’t happen, according to all happenings from the beginning of the year.

Source Serbia Energy Magazine

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