Serbia is starting energy sector reforms right now

This year’s edition of the Kopaonik Business Forum in Serbia was brought to a close today. Minister of Finance Siniša Mali and Prime Minister Ana Brnabić announced the beginning of public sector reforms. Brnabić highlighted the forthcoming changes in state-owned electricity producer Elektroprivreda Srbije and gas utility Srbijagas and said government-controlled railway firms are next.

A law on the management of state-owned enterprises will be adopted this year and the International Monetary Fund is participating in drafting it, Prime Minister Ana Brnabić asserted. The reforms start now, Siniša Mali said, pointing out that the first step is to convert EPS into a joint stock company.

“Without restructuring and a market-based way of doing business, it’s a bottomless pit and there is no upside for us there. We started with EPS and Srbijagas and we are continuing,” Brnabić underscored.

The prime minister’s statement is mirroring the claim by Pavle Petrović, who heads the Fiscal Council, the government’s independent advisory body. Earlier, at the same event, he said EPS is the biggest threat to Serbia’s budget this year alongside Srbijagas.

Acting Director of EPS Miroslav Tomašević responded by highlighting the fact that the utility has had positive financial results since the final quarter of 2022. He stressed that an investment plan has been adopted and expressed the expectation that output would rise and, with it, power imports would drop.

If there was no crisis, Serbia would have had an investment rating already, according to Minister Mali. Attracting investment and pursuing capital expenditures are the main tasks, in his view.

“Eight hundred kilometers of roads and railways, we will also invest in green energy and we secured the funds for everything,” Mali said.

No growth or development without new energy policy

Brnabić emphasized that one of the government’s priorities is to come up with a new energy policy and added that without it there is no growth or development without it. “No investor will invest in our country if 70% of our energy is coming from coal,” the prime minister explained. In her words, the green transition is required exactly for attracting investments.

The prime minister attributed the lag behind other countries in the green economy sphere to other issues that took priority, like salaries, pensions and unemployment. However, Brnabić noted that the draft amendments to the Law on the Use of Renewable Energy Sources would be passed to the National Assembly in the coming weeks as well as that an auction is about to be held for wind power projects with 400 MW in combined capacity.

Of note, EPS’s destiny became uncertain late in 2021 with the start of a series of outages at open-pit coal mines and thermal power plants and a collapse in electricity production in December of the same year.

Norwegian expertise is contributing to energy sector reforms

Rystad Energy is advising the Government of Serbia in its efforts to turn the domestic energy sector around. It is safe to assume that the reforms announced by the minister of finance and prime minister are the operationalization of the Norwegian consultancy’s propositions.

Serbia has been cooperating with Nordic countries in the said field for several years now. At the closing ceremony last month of a project with the embassies of Denmark, Finland, Norway and Sweden, Minister of Mining and Energy Dubravka Đedović said Norway is Serbia’s partner in the energy transition process both through consultations and investments.