Separation of the distribution of Elektroprivreda Srbije a step towards privatization? – Economy



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The Ministry of Energy denies that the EPS reform is a preparation for sale, experts doubt that parts of the company will be on the market

The complete separation of the distribution of the Serbian electrical power industry, that is, the formation of an independent operator of the electricity supply system, is a possible aspiration of the authorities to privatize the EPS Elektrodistribucija company in a “small door” , according to the expert public.

Separation of the distribution of Elektroprivreda Srbije a step towards privatization?  1Photo: MIROSLAV DRAGOJEVIC

Although the President of Serbia Aleksandar Vučić has stated on several occasions that there will be no privatization of EPS, what is unclear is whether he is referring to all parts of the Serbian electric power industry when he says that.

The Minister of Mines and Energy, Zorana Mihajlović, recently stated that the Government of Serbia adopted a conclusion that allowed reforms in the Serbian Electric Power Industry and created the conditions for the start of work of an independent distribution system operator.

He said that the transfer of assets and the transfer of employees for the maintenance of the distribution system from PE EPS to EPS Distribution, create the conditions for Serbia to obtain a completely independent distribution system operator.

“In addition to harmonizing EPS Distribution with the Energy Law and obtaining a license from the Energy Agency for the activity it carries out, this process is also important due to better cost control and reduction of losses in the distribution network” Mihajlović said.

The adopted plan, in addition to the transfer of assets and transfer of employees from the PE EPS Technical Center to the distribution system operator (DSO), includes the transfer of shares in EPS Distribution of PE EPS to the state, issuance of licenses and harmonization of acts of EPS Distribution.

What surprised the public is that Minister Mihajlović presents the reforms in EPS as if it were a process that has just begun, despite the fact that the separation of activities in that company was made in 2015.

At this time, in addition to the Serbian Public Companies Electric Power Industry, there is also EPS Supply, which operates as a branch, and EPS Distribution as a distribution system operator as a separate legal entity owned by PE EPS.

The only novelty in relation to the history that was in effect at the time of the separation of EPS activities five years ago is now that EPS Distribution’s ownership of PE EPS must be transferred to the state.

On that occasion, Marinika Tepic, vice president of the Freedom and Justice Party, also announced that the separation of the activities of the Serbian Electric Industry cannot be the basis for the reform of that company, as Minister Mihajlovic pointed out, because that reorganization already made.

He recalled that EPS separated its activities five years ago in accordance with the current Energy Law, and also in accordance with the Third Energy Package of the European Union.

Tepic also assessed that the separation of distribution activities does not mean that EPS cannot be the owner of the same distribution, which would be in accordance with current European Union regulations, as well as in accordance with the current Energy Law.

Privatization adviser Branko Pavlović believes that the state is obliged to explain to the public why it completely separates EPS Distribucija from Elektroprivreda Srbije.

– The separation of the electricity distribution activities from the EPS may be the first step towards the privatization of that part of the company. President Vučić, on the other hand, said that there would be no privatization of EPS. Therefore, the authorities are obliged to say if there will be no privatization of EPS, if this means that none of its parts will be privatized or some will be developed and sold as distribution – says our interlocutor.

In his opinion, at the time the government assumed the obligation to the International Monetary Fund to reform the EPS, it was sensed that it was a kind of preparation for privatization in certain segments.

– The EPS division is justified by its bad business and the need for a reorganization to stop such practices. That EPS’s business should be more efficient is an indisputable fact, but at the same time that does not mean that its profitable parts, such as distribution, should be privatized. Such a thing is definitely not in the interest of that company, thinks Pavlović.

Energy expert Goran Radosavljevic also thinks the question for the state is whether parts of EPS like EPS Distribucija will be privatized.

– Only the authorities can answer the question whether the sale of EPS Distribution will take place or not. It is not uncommon in Europe for a distribution network operator to operate in such a way that it is not owned by a power company. What is a fact is that in some other countries, such as Macedonia, the separation of electricity distribution was a step that preceded privatization. So, hypothetically speaking, the aspiration for the privatization of the electricity distribution part also exists in this case, and whether that is really the case is a question for the authorities – concludes our interlocutor.

Reket and sudu

Marinika Tepic’s statement provoked a stormy reaction from both the EPS and the Ministry of Energy. First, EPS CEO Milorad Grčić sent out a statement in which, in addition to the inevitable mention of Djilas and the arsenal of known qualifications from the parliamentary debate, he also stated that Tepić “wanted to extort money from EPS, to keep quiet about invented and nonexistent scandals. ” , and when his pockets were empty, then he became enraged and began to incite the unions in EPS, to seize the golden coca that he would like to start ”.

In a statement to Danas, Tepic stated that Grcic “has no answer to any of my questions about why EPS is being ripped apart and brought into privatization based on lies, why it turned our most valuable company into a loser, for what wasted EPS money on brothers Brnabic, Kisic, Kokezi, Ultra kopu and hooligans. I guess you can at least answer your own lies – when and how did I cheat EPS? If you don’t know how to answer publicly, you will have a chance in court “Tepić said.

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