Serbia: EPS to transform to joint stock company by October

According to Serbian media, state-owned power utility EPS should transform from public enterprise to joint stock company by the end of the year, most likely in October. After that, in 2021, a stake in the company could be offered for sale to potential investors.
Sources states that there is a possibility that the sale of EPS will come in stages, as the company is already divided into several smaller parts, in a form of a strategic partnership with the Government, as the state will retain some of its ownership in its possession, as in the case of oil company NIS.
According to the program agreed between Serbian Government and the International Monetary Fund (IMF), Serbian state-owned power utility EPS will become a joint stock company in 2020. The Government said that EPS’ legal status will be changed to a joint-stock company in line with the ongoing corporate restructuring process and financial consolidation, aiming to improve the viability of the company and ensure its professional management.
On several occasions, Serbian Government reiterated that it has no intentions to sell power utility EPS. On the contrary, it is considering the acquisitions of power utilities of neighboring countries in order to expand and strengthen its economy. According to Serbian Fiscal Council, EPS needs to perform long-delayed reforms to aimed at reducing distribution losses and reducing contributions to the state budget in order to increase its production capacities and introduce environmental standards. Increasing the price of electricity should be regarded as the last measure. In order to increase production capacities and meet environmental protection standards, EPS’ annual investments need to reach at least 600 million euros, compared to current about 380 million euros. Years of underinvestment have led to a drop in electricity production of coal-fired power plants, which also need significant investments in reaching EU environmental standards. The Fiscal Council considers that EPS should increase its electricity production by additional 5,000 GWh per year or 15 % of the current production in the next six years in order to replace outdated production facilities envisaged to be shut down by the end of 2023. This is why EPS needs to invest at least 3 billion euros in the construction of new and rehabilitation of the existing power plants, coal production and homogenization, and the reduction of power distribution losses by the end of 2025.