Serbia denies it would spin off hydropower plants to joint firm with Hungary’s MVM

Serbia’s Ministry of Mining and Energy denied that 350 MW in hydropower capacity would be separated from government-owned coal and electricity producer Elektroprivreda Srbije – EPS. It reacted to speculation that it intends to spin off the portfolio to a joint venture with Hungary’s MVM Group. Both sides should contribute assets or funds in such endeavors for it to make sense, according to Željko Marković from Deloitte.

When EPS changed its legal status from a public to a joint stock company, it remained in 100% state ownership, the Ministry of Mining and Energy of Serbia said. Anyone who speaks about removing assets from the company’s possession is “spreading untruths and panic,” it stressed.

Earlier, Deputy President of the Party of Freedom and Justice Dušan Nikezić published a controversial document, allegedly a memorandum from the Supervisory Board of EPS scheduling a meeting. The agenda includes the presentation of a proposition from Hungary’s government-owned electricity producer MVM Group to establish a joint venture in Serbia in which EPS would participate with 11 hydropower plants. The ministry also said the supervisory board didn’t reach a decision on creating such a company.

Memo was leaked from inside EPS

According to domestic media, the Serbian utility’s portfolio determined for a spinoff is valued at EUR 600 million and the combined capacity is 350 MW. Unnamed sources revealed that the deal was rejected at the meeting. EPS also runs coal mines and thermal power plants.

The biggest hydropower plants in the country – Đerdap 1 and 2 (Iron Gate 1 and 2), located on the Danube and shared with neighboring Romania, were reportedly excluded from the proposal. The group is said to consist of Ovčar Banja, Međuvršje, Kokin Brod, Uvac, Potpeć, Pirot and the Vlasina (Vlasinske) cascade.

The Đerdap hydropower complex wasn’t included in the alleged proposition

The ministry didn’t deny the authenticity of the document cited by the opposition party’s official. “Unfortunately, it is nothing new that individuals from EPS itself are falsely alarming the public and the employees, but it should be subject to investigation, why the management’s official documents appear in public with untruthful information,” the statement adds.

Marković: Joint ventures should be established on equal footing

Establishing joint ventures with other electric power industries in the region is legitimate, Senior Manager Željko Marković from consulting firm Deloitte Serbia pointed out in a statement for Balkan Green Energy News. EPS already launched a hydropower project, Gornja Drina, with Elektroprivreda Republike Srpske from neighboring Bosnia and Herzegovina, he noted.

“No one complained or disputed it. I’m not against joint ventures. But the issue in this case was that EPS would separate a group of hydropower plants and land for new renewable electricity plants – into a new company, in which the Hungarian partners would only invest EUR 600 million. EPS should cooperate with electric power industries in the region in a way that makes sense, on an equal level, so that it can boost its potential and create synergies. Both sides should contribute assets or funds. Another question is who estimated EPS’s portfolio at just EUR 600 million,” Marković stressed.

MVM marked Serbia as gateway for regional presence

Hungarian Minister of Foreign Affairs and Trade Péter Szijjártó said in March that his country would establish an energy partnership and energy community with Serbia and the Republic of Srpska, one of the two entities making up BiH. Earlier, following a meeting with Serbia’s Minister of Mining and Energy Dubravka Đedović, he highlighted the ambition to double the interconnection capacity between the two countries by 2028. They are also working on an oil pipeline project.

Bulgaria recently founded a green energy and storage firm within its energy holding

In March of last year, MVM agreed with Maneks Group from Serbia to purchase stakes of 33.4% in its subsidiaries Energotehnika – Južna Bačka and Elektromontaža. Earlier, it revealed that it wants to build a presence in Southeastern Europe through a series of acquisitions and deals before a potential initial public offering (IPO).

Gornja Drina is an envisaged cascade of three hydropower plants in the upper course of the Drina river: Buk Bijela (93 MW), Foča (44 MW) and Paunci (43 MW). EPS holds 51% of the project firm.

Of note, neighboring Bulgaria recently founded green energy and storage firm NEO. It is part of the state-owned Bulgarian Energy Holding (BEH). Utilities throughout Europe have been increasingly separating renewable energy activities from their fossil fuel businesses.