Croatia’s HEP to supply two Serbia’s cities with electricity

Croatian public utility Hrvatska elektroprivreda (HEP) should start supplying electricity to the Serbian city of Valjevo for public lighting and traffic lights by the end of November, while supplies to another Serbian city, Kraljevo, are at the moment uncertain due to the city’s debt to the previous supplier, Serbia’s public power utility Elektroprivreda Srbije (EPS).

The electricity market in Serbia has been liberalized since January 1, 2015, with all buyers free to choose their supplier. However, EPS continues to command a 98% market share.

In Serbia so far, HEP has an electricity supply deal only with Slovenian manufacturer Cimos. Last week, HEP announced that the company should start supplying the cities of Kraljevo and Valjevo, based on contracts signed in June with Valjevo and August with Kraljevo, after winning a tendering procedure.

HEP’s statement drew reactions from EPS, which has so far supplied the two cities, Minister of Energy and Mining Aleksandar Antić,  and representatives of the two cities.

EPS said that the two cities owe it money for previous deliveries and that they must settle these debts before they change their supplier, while HEP said that such an obstacle does not exist in Slovenian and Croatian markets, adding that it hopes the matter will be resolved by the end of the year.

Minister Antić said that the Energy Law envisages such situations, prohibiting the change of a supplier if a consumer has debts to the current supplier.

“Kraljevo and Valjevo will not be able to change their supplier until they settle debts to the previous supplier. What would it look like if anyone who owes to an electricity or gas supplier at one point says – well, I will now change the supplier,” said Antić.

He said that HEP will deliver 20 GWh of electricity to two cities, which is a negligible amount.

EPS said in a statement that it is not uncommon for customers who have outstanding and significant debts to try and avoid settling their debts by launching tenders to select a new supplier.

“In this case, the intention is to change the supplier even though they have not been paying bills for a long time to the current supplier. It is a legal obligation that prior to changing the supplier, the buyer must pay all debts. Both Kraljevo and Valjevo have not settled their debts to date,” said EPS.

According to EPS, the debt of the City of Valjevo was as high as 6 monthly invoices, RSD 40 million in total, and the City of Kraljevo 3 monthly invoices, RSD 45 million in total, at the time the cities launched tendering for a new supplier.

Kraljevo Mayor: HEP’s bid was better than EPS’

HEP said it is not concerned.

“There are no such obstacles and barriers on the market in Croatia and Slovenia. According to our latest information, we expect that these problems will be resolved by the end of the year,” acting director of HEP supplies Tina Jakaša said.

Kraljevo Mayor Predrag Terzić said that HEP’s bid for was lower than EPS’s.

Terzić added that Kraljevo’s debt to EPS is RSD 14 million, not RSD 45 million and that it would be paid from the budget next year.

As for the problem of non-implementation of the contract with HEP, whose realization cannot occur until the debt to EPS is settled, Terzić said that there are no penalties yet, but that he anticipates problems.

The City of Valjevo said that HEP’s offer was more favorable than the EPS’. The supply contract was signed at the beginning of June, but HEP will not start deliveries until the end of this month.

“Our current supplier EPS asked us to settle the entire debt for public lighting, which we did,” the City said.

The City of Valjevo’s annual public lighting expenditures are worth RSD 50 million.

EPS: Electricity prices in Croatia 28.6% higher

EPS said in a statement that, like other suppliers, it is bidding below-market prices at tenders published by large consumers such as these two cities.

“According to Eurostat data, commercial prices in the first half of 2017 are higher in Croatia than in Serbia by as much as 28.6% in terms of consumption of between 500,000 and 2 million kWh,” EPS said in a statement.