EBRD lends EUR 300 million to Serbia for power utility EPS, energy reforms


Photo: Ministry of Finance


March 15, 2023



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March 15, 2023



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The European Bank for Reconstruction and Development approved a financing package of EUR 300 million for liquidity for Serbia’s state-owned energy company Elektroprivreda Srbije and the country’s energy sector reforms.

Serbia’s Deputy Prime Minister and Minister of Finance Siniša Mali, EBRD’s Regional Head of the Western Balkans Matteo Colangeli, the bank’s Director for Energy for Europe Grzegorz Zieliński and Acting Director of Elektroprivreda Srbije (EPS) Miroslav Tomašević signed agreements in Belgrade on a EUR 300 million loan and state guarantees, for the country’s electricity sector.

It is the international lender’s second-biggest credit package for Serbia. It invested EUR 7.9 billion so far in the country. The financing will be channelled to EPS, “which has faced a significant liquidity squeeze over the winter season, as significant volumes of electricity are imported,” EBRD said. However, it added the funds are intended for other uses as well.

Unspecified sums to be used for auctions rollout, corporatization of EPS

“The project will support the government’s strategy to decarbonise the electricity sector, phase out coal by 2050, develop the regulatory framework for the launch of renewable energy auctions and incentivise their roll-out, and ensure both energy security and sustainability of supply,” according to the bank. The Ministry of Finance issued a similar statement.

EBRD revealed no part of the package is for coal production or thermal power plants running on the fossil fuel

Of note, the auctions mechanism has been completed last year and the public call for bids for wind power with a quota of 400 MW is expected to be issued within a month, after many delays.

EBRD said it would also provide project-related technical assistance to EPS including support for the development of a decarbonization strategy and action plan; reforms to strengthen the company’s corporate governance and managerial capacity; the implementation of climate risk reporting in line with Task Force on Climate-Related Financial Disclosures (TCFD) recommendations; and programs for corporate and human capital development including the retraining of workers currently employed in the coal industry, promoting female talent and attracting highly skilled employees.

Mali: No more delays in EPS turnaround

Minister Mali reiterated there would be no more delays in the push to corporatize the state-owned coal and electricity producer and district heating provider, as a strategically significant step for the country’s entire energy sector.

“In coordination with the International Monetary Fund and other international financial institutions and donors, we are committed to contributing to the transformation of the energy sector, turning it from a drain into a driver of the country’s green economy transition,” Colangeli said.

No part of the EBRD loan will be used for the company’s existing coal assets, the announcement reads. The financing will be provided in two tranches.

World Bank loans to Serbia also lack details

Just last week, the World Bank said it approved two loans of EUR 219 million in total to Serbia for similar purposes.

EUR 149.9 million is intended to be used to strengthen public sector institutions on a path to achieving resilient, greener, sustainable and more inclusive economic growth. The funds will be used for policy and institutional reforms to better align fiscal management with the green agenda by increasing the transparency of budgetary spending on climate-related activities and on the environment, the international financing institution wrote.

The aim is to accelerate the clean energy transition through energy market reforms to make the national energy utility, EPS, sustainable and through faster adoption of renewables while protecting energy-vulnerable consumers, the World Bank added. It said the loan would help Serbia align its domestic legislation with European Union standards on climate and environmental action, with an emphasis on waste and air quality management.

Serbia has secured EUR 219 million for its green agenda and energy transition from the World Bank, which partnered with AFD and KfW

The transaction has been prepared in partnership with the French Development Agency (AFD) and Germany’s KfW Development Bank.

The other part, EUR 69 million, is from a program for strengthening core public financial management functions and enhancing institutional capacities for achieving a green transition. It was prepared with AFD. The loan is also intended to enable Serbia’s energy transition and contribute to the reduction of greenhouse gas emissions.

Asked by Balkan Green Energy News about the details, the World Bank responded that “the proceeds are not earmarked to specific items but disbursed in line with the achievement of policy changes and results associated with the green transition.”

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