Under the leadership of Dušan Živković, the new management of Elektroprivreda Srbije (EPS) had projected a profit of 54 billion dinars for 2024, but the actual profit was more than two times lower than expected.
EPS’s 2024 financial results show a sharp decline in profitability: from 958 million euros in 2023, the profit dropped to just 200 million euros.
Before the dismissal of the former CEO, Miroslav Tomašević, in May 2023, EPS had forecasted a profit of 77 billion dinars (650 million euros) for 2024. However, under the new leadership, these plans were revised down to 54 billion dinars (460 million euros), but the actual result was much lower than even the revised target.
A significant part of EPS’s record profit in 2023 was due to nearly 300 million euros in compensation from the state. This compensation was based on government decisions that forced EPS to sell electricity to industry at prices well below the market value during 2022 and 2023.
Production issues behind profit decline
The primary reason for this major shortfall in profit was problems in power generation. The drop in production was partly due to natural factors that EPS could not influence, but there were also significant operational problems at thermal power plants.
A major drought during the summer led to reduced electricity production from hydroelectric plants. Additionally, high summer temperatures increased electricity consumption due to air conditioning use, which led to higher electricity imports. While daytime electricity prices were relatively low due to increased solar energy production in Europe, prices soared in the evening, reaching up to 700-800 euros per megawatt-hour—more than 10 times higher than during the day.
EPS managed to alleviate this issue by increasing hydroelectric production during the evening hours. Credit must be given to EPS experts for their efficient management of the system, which minimized electricity imports when prices were highest, thus reducing the overall costs.
However, the real challenges emerged as the winter season began, with significant problems in thermal power plants—key to maintaining energy security. These issues stem from decades of insufficient investment in the plants, delays in the discovery of new coal deposits, and the poor quality of the coal currently being used. Many of these thermal plants are over 50 years old, making their production not only energy-inefficient but unreliable as well.
In late summer 2024, after more than 30 years, a new 350 MW thermal block in Kostolac was connected to the grid. However, despite this addition, problems in power production persisted, especially as heavy snowfalls in December increased coal moisture levels at stockpiles, leading to production failures at several units in the Obrenovac power plants.
Supply issues and limited solutions
The real test for EPS came in December and January when Serbia was forced to import up to a third of its electricity needs. This could have posed a major problem had Europe experienced an electricity shortage, but relatively high temperatures in Western Europe and strong wind energy production in the North Sea provided sufficient supply at favorable prices. However, problems worsened when snow increased coal humidity, further hampering thermal plant performance.
EPS is only expected to see improvements once full exploitation of the new Radljevo coal mine in the Kolubara Basin begins. However, the full operational capacity of this mine has been delayed from this fall to next year, with no public explanation for the delay.
It should also be noted that renewable energy sources would not have solved the supply issues, as the days when EPS had to import large amounts of electricity were clouded and windless.
No accountability for poor results
The financial reports clearly show the company’s dire situation. The dramatic drop in profitability compared to the previous year, as well as the significant gap between actual and projected results, indicate that EPS is facing serious problems.
Despite promises of transformation from the government, led by President Vučić and ministers Zorana Mihajlović and Dubravka Đedović, EPS continues to face financial difficulties. The company was restructured into a joint-stock company in spring 2023, and a new supervisory board was formed, including experts from Norway. Instead of improving the company’s performance or increasing transparency, EPS has seen a drop in production and profitability, with a lack of information regarding operations, and members of the supervisory board have been largely silent.
In a properly managed joint-stock company, such a significant decline in financial and production results would lead to the dismissal of top executives, unless justified by extraordinary circumstances. In Norway, such results would lead to the resignation of all board members. However, in Serbia, no one has been held accountable for these poor results, and no adequate explanation has been provided to the public.
While transformation into a joint-stock company is not inherently the cause of these issues, state interference continues to undermine EPS’s ability to operate independently. The current leadership is unable to resist pressures from the highest levels of government, which is evident considering the abrupt dismissal of former CEO Miroslav Tomašević, who had shown strong results, with no explanation provided to the public.
