Electricity bill collection rate drops up to 30%, utilites ask for loans

The drop in the electricity bill collection rate ranged from 10% to 30% in March in most of the contracting parties of Energy Community, with Kosovo* and North Macedonia being the most affected, while data for this month show a further sharp decline. In the meantime, state power utilities in Albania, Montenegro, and Serbia are taking or considering loans.

According to the Energy Community Secretariat’s report on the current status of financial liquidity of the electricity sector, measures taken to contain the COVID-19 crisis have led to a persistent decrease in electricity suppliers’ income due to non-payment of electricity bills.

Serbia’s power utility invoked force majeure to halt its legal obligations to privileged power producers under PPAs

“As the crisis emerged in mid-March, governments, regulators, and utilities in most contracting parties pledged not to disconnect customers for reasons of non-payment and to waive interest for delayed payments during the state of emergency. Relief measures, combined with curfews and limited working hours of customer centers, led to an immediate drop in the electricity bill collection rate, especially in those contracting parties where online payment systems are not yet widely utilized by customers,” the report reads.

In North Macedonia, the universal supplier had to secure loans and apply for a reduction in payment of its liabilities in April

The decrease in supplier income has resulted in insufficient working capital for suppliers to pay their liabilities.

“In North Macedonia, a universal supplier, which had paid all its liabilities from March 2020 had to secure loans and apply for a reduction in payment of its liabilities in April. In Serbia, a power utility invoked force majeure to halt its legal obligations to privileged power producers under power purchase agreements (PPAs),” the report underlines.

The majority of supply companies foresee accumulating substantial customer debt by July 1.

EPCG has asked for a EUR 50 million short-term facility

Suppliers that are facing an immediate risk of insufficient working capital have either entered into negotiations with commercial banks and international financial institutions (IFIs) on additional loans or with their governments to receive support either directly or as a guarantee towards commercial banks, a report on energy investments and financing reads.

Serbia’s EPS could get loan but with some conditions

This is an overview of the activities of the European Bank for Reconstruction and Development in the region:

• Montenegro: EPCG has asked for a EUR 50 million short-term facility with a two-year disbursement period
• Serbia: EPS may have access to the same type of facility and is currently considering the option; the EBRD solidarity support to EPS foresees covenants related to moving to the decarbonisation of the energy sector and reinstatement of the original PPAs, as well as adherence of EBRD’s principle of disclosure of emissions and stricter rules on the financial governance of EPS
• Kosovo*: Distribution system operator KEDS is not a client of EBRD and cannot benefit from the facility
• Albania: The government has asked the EBRD to look at the financial situation of OSHEE. Support to local partner financing institutions (PFIs) is available mostly for SMEs‘ needs and potentially on demand for covering partly the renewable investments owned by the PFIs.

The European Investment Bank is currently discussing a program loan to facilitate financing to local governments in the Western Balkans to reduce the financial constraints of energy operators.

Germany’s KfW Development Bank is monitoring the needs of different energy utilities for liquidity support, in order to prepare targeted interventions.