Serbia is starting energy sector reforms

by Cristian Florescu

The Kopaonik Business Forum in Serbia ended last week. Minister of Finance Siniša Mali and Prime Minister Ana Brnabić announced that public sector reforms would begin soon. Brnabić said that changes would happen in state-owned electricity producer Elektroprivreda Srbije and gas utility Srbijagas and that government-controlled railway firms will be next.

This year, a law will be passed about how state-owned companies should be run. The International Monetary Fund is helping to write this law. Prime Minister Ana Brnabić says that the reforms will start happening now. Siniša Mali says that the first step is to turn EPS into a joint stock company.

The prime minister said that the government’s independent advisory body, the Fiscal Council, believes that EPS is the biggest threat to Serbia’s budget this year.

The utility company’s financial results have been positive since the final quarter of 2022. The company has an investment plan to improve its output and reduce power imports.

If there hadn’t been a crisis, Serbia would already have had an investment rating, according to Minister Mali. He believes that the main tasks are attracting investment and pursuing capital expenditures.

Brnabić emphasized that one of the government’s priorities is to come up with a new energy policy and added that without it there is no growth or development without it. “No investor will invest in our country if 70% of our energy is coming from coal,” the prime minister explained. In her words, the green transition is required exactly for attracting investments.

The prime minister attributed the lag behind other countries in the green economy sphere to other issues that took priority, like salaries, pensions and unemployment. However, Brnabić noted that the draft amendments to the Law on the Use of Renewable Energy Sources would be passed to the National Assembly in the coming weeks as well as that an auction is about to be held for wind power projects with 400 MW in combined capacity.

Of note, EPS’s destiny became uncertain late in 2021 with the start of a series of outages at open-pit coal mines and thermal power plants and a collapse in electricity production in December of the same year.

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