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Revitalization of EPS, the moving force of Serbian economy |
Chain effect
Belgrade, April 29, 2002 - Investing in the recovery of EPS [Elektro Privreda Srbija - Electric Power Industry of Serbia] – should trigger other companies to invest in Serbia as well, since all businesses here depend on the electrical system. The decomposition of the EPS monopoly is not currently necessary, claim some knowledgeable consultants on the issue.
EPS could be looked at as a major integrator of the Serbian economy, not only because it enhances the capacities of other firms, but also because of the fact that each system at least indirectly depends on EPS. The goal of EPS is therefore, dual: to provide reliable, constant electrical service and, integration of the most important segments of the Serbian economy, which managed to sustain and even reach certain almost unbelievable levels of production while constantly lacking in such basics as adequate cash flow, due to the heavy economic sanctions emplaced by western governments and trans-governmental organizations. That is exactly why investing in the revitalization of EPS could have a much bigger impact on the Serbian economy than first perceptions might seem to indicate.
“As judged by a project of the E4 team of experts, (Energy, Ecology, Economics and Efficiency) approximately 5,6 billion USD should be set aside for the redevelopment of EPS in the next five years. That is a completely real and attainable goal,” stated Miljan Vuksanovic, executive director of E-4 team for Ekonomist Magazin. Namely, the interest for this project is noticed, which can be justified with the project prosperity. One of the main problems of EPS according to Vuksanovic is the unrealistic price of electric energy in Serbia. Changing the mandate on this matter is a concrete precondition for ensuring the success of this project.
The current price of electric energy in Serbia is about two cents per Kwh, and increasing it by another two cents would result in additional revenues of almost 500 million USD annually. Unfortunately, this is being referred to in local press as a huge price incresase of 50%. “The fact that although unreal, the price of electric energy is a heavy burden for most of the citizens,” Vuksanovic commented adding that this problem could be easily solved through the above-mentioned investment program.
Additional revenue for EPS, guaranteed through this price increase, would be excellent security for potential partners, ensuring that their investment will be profitable. On the other hand, out of that 5.6 billion USD, more than two billion would go directly to the country by employing domestic firms to both manufacture equipment and perform the actual revitalization process. Work which was accomplished in 2001 to recover the system after the NATO bombing is the best way to confirm this claim: a fresh influx of investment (some 100 million DEM) proved that both Serbs and Serbian firms were capable of rather fast mobilization and efficient work performance. The entire mechanism of that repair job also showed that investing in EPS could be realized efficiently, with a reasonable degree of control and reliability.
Increasing economic activity, accomplished through utilizing Serbian firms for the work on EPS’s revitalization, should result in noticeable revenue increases and the possibility of paying the electric bill. On the other hand, if the price is increased now, the citizens could find alternative ways of heating and therefore decrease the pressure on EPS. By mentioning that the realization of this project needs legal regulation, Vuksanovic says that it is this question which makes the Law on Energy, yet to passed through the Serbian legislature, such a special issue.
That is a large problem for the Ministry of Energy, Vuksanovic says, and adds that the Ministry does not appear to have the controlling role, but it directly runs the entire system. The lack of development vision at EPS is another problem, since it is of such strategic importance for the reconstruction of EPS and the decomposition of the energy sector here into more salable units. "EPS reconstruction, at the moment, cannot be the subject in any discussion, because the efficiency of the entire system needs to be brought to a higher level first", claims Vuksanovic. In accordance to his words, simple "cosmetic" dividing of separate entities would not have a positive effect. The reason for this is hidden in the experiences of the surrounding countries, where dividing parts of the electrical sector did not appear to be the best solution, and therefore they started thinking about reuniting those divisions into a sole system once again.
Related articles:
Sector
Analysis - Electric Power Industry of Serbia (EPS)
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