Serbia changes statute of its coal, power utility EPS to turn it into joint stock company

The Supervisory Board of Elektroprivreda Srbije (EPS) changed the statute today. It enables switching Serbia’s flagship energy utility from a public enterprise into a closed joint stock company, the Ministry of Mining and Energy said.

After much controversy, the government pushed through a major step in the transformation of state-owned coal and power producer EPS. The supervisory board changed the statute of Serbia’s main energy utility, clearing the way for the public enterprise to become a closed joint stock company. The government stressed it would remain 100% under its control.

The management structure will become more professional, enhance efficiency and make the utility a regional energy giant, according to the Ministry of Mining and Energy. It pointed out that it agreed with the request of a labor union for employees to have a representative on the supervisory board.

In the new setup, the company has a one-member assembly

One of the main sticking points in the negotiation was the legal definition of EPS’s main activity. From now on it is production, while electricity trading is secondary. EPS is continuing to be the public power supplier under regulated prices.

Number of members of supervisory board increasing from four to seven

The assembly will now have only one member, appointed by the government. The assembly appoints the supervisory board, to which it transfers most of its authority, the ministry noted.

The number of members of the supervisory board is being increased from four to seven. After workers’ unions stood up against the proposed changes, the ministry agreed to allow one seat for a representative of the employees. The supervisory board determines the company’s strategy and goals and it appoints the executive board, the ministry pointed out.

Đedović: Changing the legal framework will enhance the management’s efficiency, while there will be no divestment nor headcount reduction

“Elektroprivreda Srbije is the lifeblood of our energy system and the entire economy. It is in the national interest for it to be strong and independent and the driver of economic development. Changing the legal framework will enhance the management’s efficiency. There will be no divestment nor headcount reduction while EPS will continue to be both an electricity supplier and trader. Professionalizing EPS should enable the acceleration of the implementation of a large number of projects aimed at enhancing electricity production. At the same time, the transformation of EPS is also the first step in reforming our energy enterprises. The goal of the Government of RS is to strengthen our energy sector, introduce professional management, improve management and improve the business results of state-owned energy enterprises. I thank everyone for a constructive dialogue,” Minister of Mining and Energy Dubravka Đedović said.

EPS is licensed as the public electricity supplier until 2026.

Law allows only one main activity

Earlier, after one part of a divided workers’ union demanded to formally keep supplying households and small firms as a public interest activity, the ministry said it would be contrary to the 2014 Law on Energy. It stipulates that electricity supply including large-scale electricity supply is a market-based activity in line with the European Union’s regulations, the statement adds.

The Law on Companies stipulates that a company has only one main activity and that it can perform other activities that aren’t forbidden by law, the ministry said in a response to the demand from the labor union to keep electricity trading as a main activity as well. The ministry has claimed that those that oppose reforming EPS are motivated by keeping their positions, and not representing workers’ interests.