June 23, 2024
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Serbia: Could EPS expand in the region?

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Serbia’s President, Aleksandar Vučić, made it clear that the sale of EPS (Electric Power Industry of Serbia) is not on the agenda. Instead, he announced plans for Serbia to acquire other power companies in the region, signaling a shift towards regional energy consolidation. However, skepticism looms within the professional sphere regarding the feasibility of such an endeavor, particularly considering EPS’s financial challenges, which are estimated to have cost the country over one billion euros.

Vučić reiterated this stance during a pre-election meeting of the coalition surrounding the Serbian Progressive Party in Lazarevac, dismissing speculations about EPS’s privatization. His remarks indirectly suggest that Serbia aims to leverage its energy prowess to extend influence across the region.

However, energy experts like Velimir Gavrilović express doubts about Serbia’s ability to ensure EPS’s stability, let alone expand its capacities by integrating neighboring countries’ energy systems. Gavrilović argues that such expansion is only viable if EPS transitions from losses to capital accumulation.

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Given EPS’s recent struggles, which included personnel issues and financial losses amid rising market prices and electricity imports, doubts persist about its financial capacity for expansion. Gavrilović emphasizes the need for substantial funding, possibly through state-backed borrowing, for planned projects like the construction of one gigawatt of solar power plants.

He suggests that expansion efforts should primarily target Montenegro and Republika Srpska, considering their existing connections with Serbia. However, Miodrag Kapor views this announcement as politically motivated, potentially serving geopolitical interests rather than economic rationale.

Nenad Jovanović echoes the sentiment, asserting that EPS lacks the financial means for expansion. While theoretically possible, practical obstacles hinder such ambitions. Željko Marković concurs, suggesting that due to financial constraints, any expansion would likely involve acquiring parts of smaller regional power companies.

Recent challenges, including a major incident at the end of 2021 that led to widespread power outages and infrastructure damage, highlight EPS’s vulnerabilities. Despite criminal charges against EPS leadership, accountability remains elusive.

In summary, while the idea of Serbia acquiring regional power companies is politically appealing, financial constraints and EPS’s operational challenges cast doubts on its feasibility. Any expansion efforts would require substantial funding and address internal issues within EPS to ensure stability and success.

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