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Serbia: IMF criticizes EPS for not adjusting electricity prices for small and medium enterprises

27.Nov 2020.

The analysis performed by the International Monetary Fund (IMF) showed that the production price of electricity is lower that the sale price for residential consumers and small and medium enterprises. It also showed that current RES subsidy of 0.079 eurocents per kWh, which is paid by consumers through electricity bills, is not sufficient to cover payments for produced “green” energy.

IMF criticized the Serbian authorities for not adjusting the prices of electricity for small and medium enterprises in September, which is actually lower than the production price, and for not increasing subsidies for electricity production from renewable sources.

According to Serbian newspapers, IMF also criticized non-compliance with deadlines related to the procedures for the transformation of a company from a public company into a joint stock company, primarily the part related to the delay in launching tenders for the valuation of EPS’ assets.

According to the newspapers, the Serbian side explained that both households and small commercial consumers were severely affected by the coronavirus pandemic, therefore it was decided not to increase electricity prices. The IMF acknowledged this reasoning, but still urges for the increase of RES subsidies paid by the consumers, because EPS’ losses from purchases of electricity produced from renewable sources are steadily increasing.

In July, media reported that the IMF requested an increase of electricity prices by 7.7 to 7.9 % as of 1 September. The last increase in Serbia was in December last year, when electricity prices for residential and small business customers rose by 3.9 %. Currently, the price of electricity for this category of consumers is around 0.06 euros/kWh, without VAT. Serbia has the lowest price of electricity in the region and in Europe. The price is 7.2 % lower compared to North Macedonia, 18.9 % lower compared to Bulgaria, 24 % lower than in Albania, while kWh of electricity is 71 % more expensive in Croatia and 120 % in Slovenia.