The International Monetary Fund (IMF) has raised concerns about the financial stability of Elektrodistribucija Srbije (EDS), Serbia’s electricity distribution system operator. The IMF’s recent report highlights that insufficient network usage fees are weakening EDS’s finances, creating fiscal risks for the company. EDS, which was separated from the state-owned Electric Power Industry of Serbia (EPS) in 2021, relies heavily on loans from development partners backed by state guarantees to fund significant investments in modernizing its distribution network.
In 2023, EDS posted a loss of 9 million euros, a sharp decline from the 2 million euro profit recorded the previous year. To address its financial challenges, Serbia’s 2025 state budget includes provisions for two new loans for EDS. These include a 55 million euro loan from domestic and foreign banks for network improvements and 100 million euros from the European Investment Bank (EIB) to enhance the network’s reliability. Additionally, EDS will begin repaying 50 million euros in loans from OTP Bank and Intesa Bank starting in 2027, with a smart meter loan from the European Bank for Reconstruction and Development (EBRD) due for repayment next year.
The IMF report notes that Serbian authorities are committed to reviewing the adequacy of EDS’s network usage fees. The Ministry of Mining and Energy, in collaboration with EDS, EMS, and EPS, will conduct a study on fee adequacy by March 2025. Based on the findings, a fee adjustment is expected to be implemented by May 2025, aiming to improve EDS’s financial health and enable essential investments in the distribution network.
In addition to addressing the financial situation at EDS, the IMF report also mentions Serbia’s progress in strengthening its gas sector. Efforts to separate Transgas from Srbijagas are on track, with the goal of finalizing the process with the Energy Community by 2025, in line with Serbia’s EU obligations.
Looking ahead, Serbia plans to update its Energy Investment Plan by March 2025, outlining investment needs, projected returns, and funding sources to support energy security and the green transition. The government also emphasized its continued commitment to developing a comprehensive green growth strategy, including preparations for the EU Carbon Border Adjustment Mechanism (CBAM), which will involve the consideration of carbon pricing mechanisms such as carbon taxes.
