EBRD supports Serbian reform programme for the power sector

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The European Bank for Reconstruction and Development (EBRD) is supporting a comprehensive reform programme for the power sector in Serbia by extending a EUR 200 million restructuring line to the state-owned utility Elektroprivreda Srbije (EPS) that generates, distributes and supplies electricity across the country.

The restructuring loan is aimed at improving the power infrastructure within the country by helping EPS restructure its balance sheet and support its recovery after the devastating aftermath of the Balkan floods in 2014. Following those events, the power utility faced about EUR 86 million worth of losses and was forced to reduce its power output by one third due to damage on its coal-production plants. The EBRD reported that the floods also caused the Serbian economy to contract by 1,8% in 2014, but the combined effect of the coal extraction and power generation, as well as the re-launch of operations of a major steel plant is expected to expand the economy 0,5% this year.

The EBRD investment will also help the EPS reach long-term development objectives such as commercialization, raising standards of corporate governance and improving energy efficiency.
The EBRD’s financing will support further reforms in Serbia’s energy sector and will help achieve energy market liberalization, a significant condition for the country’s admission to the European Union. Another positive impact will be the deepened regional integration in the Western Balkans as a result of the stimulated cross-border energy distribution and trade.

The programme will be implemented in close cooperation with the Government of Serbia, alongside support from the World Bank and the International Monetary Fund, and is a major part of a wider fiscal consolidation drive by the authorities of Serbia.

”We believe our financing will make EPS more efficient. We are pleased to be working on the modernization of the company, increasing environmental and social standards and corporate governance. We see a lot of potential to further develop EPS as a commercial company and it is important EPS continues to implement the reforms started over the past year or two,” said Nandita Parshad, EBRD Director Power and Energy.

”EPS needed to respond urgently last year to the unprecedented and catastrophic floods which hit Serbia.  This put huge strains on EPS and we commend the resilience demonstrated by the company and management at that time. This loan is hopefully the final step to help EPS recover from the damage and by re-financing liabilities taken at the time, management will be in a position to press forward with a vision for a more efficient company”, added Daniel Berg, EBRD Director for Serbia.

”We’re delighted to be working with our long-standing partner EBRD. A lot of hard work lies in front of us, but we are committed to making EPS a modern, efficient and competitive regional leader in the energy sector,” said Aleksandar Obradovic, General Manager of EPS.

Aleksandar Antic, Serbia’s Minister of Energy and Mining, said: ”This is a very important step for Serbia. We are grateful to the EBRD for taking such active role in providing support to EPS, alongside the World Bank and the IMF.”

Since the start of its operations in Serbia, the EBRD has invested over EUR 4 billion in over 190 projects across the country. The Bank invests in the financial sector, industry, commerce, agribusiness, energy and infrastructure.