For decades, Serbia’s national utility, Elektroprivreda Srbije (EPS), operated under the illusion of indestructibility. Its sprawling lignite mines, ageing thermal plants and hydropower dams formed the backbone of a system that appeared resistant to regional shocks, political storms and market fluctuation. Serbia was one of few European countries that could boast of electricity self-sufficiency, even exporting power in particularly strong hydrological years. To the public, EPS was the quiet giant whose failures remained hidden and whose strengths were taken for granted. To successive governments, it was a tool of political comfort: a state company whose artificially low tariffs soothed voters and whose vast workforce guaranteed loyalty. Yet beneath this façade, a crisis was unfolding slowly, layer by layer, year after year.
Today, that crisis is no longer concealed. Serbia is importing significant volumes of electricity. EPS’s financial performance has deteriorated sharply. Strategic investments are delayed, cancelled, or never truly launched. Reconstruction of critical power-generation assets is years behind schedule. And the company lacks a robust development plan extending meaningfully to 2030 or 2035—a gap that becomes more astonishing with each passing winter. The system that once guaranteed security is now itself the source of insecurity.
The question dominating Serbia’s political, industrial and media landscape is no longer whether EPS is in trouble, but who is responsible for allowing a strategic national resource to drift so far from sustainability.
The answer cannot be found in one office, one government, or one management board. EPS’s crisis is the product of structural neglect, political interference, governance confusion, and an energy policy trapped between nostalgia and indecision.
The legacy of deferred investment
EPS’s problems began long before the public became aware of them. Serbia has not commissioned a major new power-generation facility in over thirty years. While neighbouring countries—Romania, Bulgaria, Hungary, Croatia—invested in new hydro, gas or renewable capacity, Serbia remained anchored to lignite. Yet lignite plants, the pride of Yugoslav engineering, were not designed to operate indefinitely. Even routine modernisation requires billions in capital, strict scheduling and independent oversight. Serbia postponed all three.
Reconstruction of existing thermal units became a theatre of delay. Key overhauls at Kolubara, Kostolac, Nikola Tesla A and B suffered procurement failures, contractor disputes or engineering errors. Hydropower refurbishments, which should occur in predictable intervals, were repeatedly postponed. Maintenance budgets were trimmed. Spare parts arrived late. And equipment designed in the 1970s and 1980s was forced into continuous operation in a manner no technical standard could justify.
By the time Serbia faced the catastrophic energy crisis of late 2021—when a combination of low hydrology, record coal shortages and multiple breakdowns forced EPS into emergency electricity imports—the structural weaknesses had accumulated beyond repairable margins. The shock was not caused by a single failure, but by a system weakened through years of under-maintenance and political avoidance.
Political incentives and the cult of cheap electricity
EPS’s deterioration is inseparable from Serbia’s political economy. For nearly two decades, electricity prices were kept artificially low to maintain social stability and electoral calm. The public, culturally accustomed to cheap energy, expected no significant increase. Governments feared that even modest tariff adjustments could provoke discontent. EPS was instructed, implicitly or explicitly, to absorb the cost of stagnation.
Tariffs that do not reflect true production and investment costs create two predictable outcomes: operational budgets shrink and investment capacity collapses. EPS suffered both. Without adequate revenue, the company cannibalised maintenance funds to finance basic operations. Investment plans were drafted, celebrated and quietly shelved.
Governments enjoyed the political credit; EPS absorbed the structural damage.
Governance confusion: The assembly, the supervisory board and the GM
EPS’s governance reform, introduced in 2023, was presented as a turning point: a shift toward corporate professionalism, transparency and international best practice. The changes created a new EPS Assembly—representing the owner, the state—formally managed by the Ministry of Energy. The Supervisory Board was reconstituted with Norwegian experts and Serbian professionals, giving Serbia access to global know-how. The GM was elected by this board and subsequently appointed executive directors for production, finance, investment and distribution.
On paper, the structure appears modern. In practice, it raises as many questions as it resolves.
The Assembly, directed by the minister of energy, carries ownership authority but also political weight. The Supervisory Board provides oversight yet operates under ministerial influence. The GM is accountable to the board but dependent on the Assembly’s strategic approval. Executive directors execute operational tasks but cannot override inherited structural issues. Responsibility, therefore, becomes diffuse.
If a project fails to progress, who bears the consequences? The minister who directs policy but not operations? The Supervisory Board that oversees strategy but not daily management? The GM who implements decisions but cannot independently alter investment frameworks? Or the executive directors whose mandate is limited by legacy constraints?
Diffuse responsibility is indistinguishable from no responsibility.
Delays in new construction: Plans without projects
Local media have repeatedly highlighted the absence of large-scale construction projects within EPS. Announcements have been plentiful: new gas-fired plants in Belgrade, Niš and Novi Sad; hydropower expansions on existing rivers; pumped-storage facilities such as Bistrica; solar platforms integrated into EPS’s portfolio; and even proposals for nuclear partnerships.
What remains missing is execution.
Feasibility studies linger in bureaucratic cycles. Environmental assessments drag on. Procurement frameworks are inconsistent. Contractor selections stall. Negotiations with foreign partners lack momentum. And EPS’s internal capacity to manage large-scale investments has eroded after decades of institutional stagnation.
These delays force Serbia into deeper dependency on imports. When new capacity is not built, old capacity runs harder. When old plants fail, the system collapses into PR campaigns rather than engineering solutions.
Failures in reconstruction: The cost of doing nothing
Reconstruction of existing assets is the backbone of any utility’s reliability. EPS, however, entered a period where reconstruction became less a strategy than a reaction. Breakdowns triggered action; strategic foresight did not.
The 2021 collapse of thermal coal supply at Kolubara was a turning point. Management failures, poor mine logistics, inadequate equipment and abandoned investments converged into a crisis that forced Serbia to import electricity at exorbitant market prices. Yet even after this trauma, key reconstruction projects continued to lag, particularly in hydropower, where rehabilitation is equally essential. The absence of timely upgrades in Djerdap and several inland hydropower stations further destabilised EPS’s baseload and peak-balance reliability.
When reconstruction fails, generation declines. When generation declines, imports rise. When imports rise, financial results deteriorate. And over the last three years, EPS’s financials have done precisely that.
EPS’s financial stress: A company under strain
EPS once produced stable profits. Today, its balance sheet tells a different story. Rising import costs, ageing equipment, tariff repression and investment delays have produced cumulative financial pressure. Liquidity buffers shrink as operational costs rise. Capital reserves erode. Borrowing becomes more expensive. The company’s margins tighten.
In some years, EPS spent hundreds of millions of euros on emergency electricity imports—money that should have funded new plants or reconstruction works. The result is a paradox: Serbia pays more for electricity than if it had invested earlier, yet remains stuck with outdated production capacity.
These financial stresses are self-reinforcing. Without investment, reliability deteriorates. Without reliability, market dependence increases. Without reforms, tariff adjustments generate political backlash.
EPS is trapped in a cycle that only disciplined, depoliticised governance can break.
The missing 2030/2035 development plan
Strategic planning is the oxygen of an energy system. EPS, remarkably, has no coherent, actionable development plan extending to 2030 or 2035. The absence is not merely bureaucratic; it is existential.
Without a plan, EPS cannot:
– define generation mix targets
– prioritise which plants will be modernised or closed
– integrate renewables in a structured manner
– determine required grid reinforcements
– calculate long-term tariff frameworks
– attract foreign financing
– negotiate with industrial partners or donors
Neighbouring countries are far ahead. Romania and Greece have detailed decarbonisation paths. Bulgaria has financing frameworks for thermal-transition zones. Croatia integrates renewables through strategic baseload planning. Serbia stands alone in its ambiguity.
An energy system without a plan has no direction. A utility without direction has no resilience.
Who is responsible? The debate Serbia can no longer avoid
Responsibility for EPS’s crisis is not a single individual nor one government. It is the cumulative result of:
– political interference
– tariff populism
– delayed investment
– weak project governance
– lack of transparency
– absence of long-term strategy
– structural management dysfunction
– institutional fragmentation
But responsibility must still be assigned—if reform is to begin.
The minister of energy holds ownership authority through the EPS Assembly. The Supervisory Board holds strategic oversight. The GM and executive directors hold operational responsibility. Parliament holds regulatory authority. Previous governments hold historical accountability.
Today’s leadership inherits the consequences. But inheritance does not absolve responsibility. EPS cannot be modernised by distributing accountability across so many offices that none of them can be held to it.
The road ahead: Reform or stagnation
EPS stands at a crossroads. Its crisis is not terminal, but time is shortening. Serbia needs:
– modern baseload capacity
– major hydropower rehabilitation
– flexible gas-fired backup plants
– renewables integrated through storage and grid reinforcement
– depoliticised governance
– realistic tariffs
– and above all, a credible 2035 plan
These are not optional reforms. They are the conditions for preventing Serbia from becoming a long-term electricity importer—a fate that would reshape its economic stability, industrial competitiveness, foreign investment appeal and national sovereignty.
The price of avoidance
Serbia is now paying the price of a decade of avoided decisions. EPS did not collapse because of a single crisis. It decayed through a thousand deferred choices.
Responsibility belongs to a system, not a scapegoat. But systems can change, and Serbia’s energy future depends on whether its leaders are willing to confront the political cost of doing what previous generations refused to do: reform EPS not to preserve the past, but to secure the future.
