Postponing the heating season, which was supposed to start in Serbia on October 15, will perhaps save millions on gas, but the question is how it will affect the power system, which has already collapsed due to bad management and the import of missing energy sources.
Although the daily temperatures help to keep the consumption of electricity as a replacement for cold radiators from being too high, the question is how the delay in the start of heating the apartments via the central heating system for about 15 days will affect the EPS.
As Elektroprivred Srbije (EPS) stated in their response to Bloomberg Adria, there was no import of electricity in the first two weeks of October because the hydrological conditions improved. For now, as they say, the supply of electricity to citizens and businesses is stable, and restrictions during the winter, they point out, are not part of their business plan. Dispatch data so far indicate that the total consumption in October is lower by about three percent compared to the same period last year, which was also contributed by the higher average temperature.
Bloomberg Adria was told by that company that the overhaul of production capacities is nearing completion, as well as that projects to improve coal production are underway. They add that, in addition, additional quantities are being procured.
They estimate that in 2022, 1.8 million tons of coal will be imported from Bulgaria, Romania, BiH and Montenegro and 276,000 tons from Indonesia.
“Even at the time of the biggest energy crisis, EPS stably supplies citizens and the economy. In cooperation with the Government of Serbia, EPS has been intensively taking all the necessary measures for months to prepare for the winter period so that citizens and the economy have enough electricity next winter,” they said. from that company for our media.
They explained that during the summer the import of electricity was higher due to the bad hydrological situation. “Prolonged drought and historically bad hydrological conditions with river inflows, which are the lowest in the last 10 years, have affected the very low levels of reservoirs in Serbia.” That is why EPS produced 30 percent less electricity from hydropower plants than last year.
EPS loss in the first half of the year is almost 50 billion dinars
In the first half of the year, energy imports dragged EPS into a loss of 49.2 billion dinars. The poor quality of coal produced in Serbia, as well as the fact that new coal mining pits were not prepared on time, forced EPS, in the midst of the biggest energy crisis, to import energy sources, at enormously high prices.
When asked by Bloomber Adria what result they expect by the end of the year, the EPS answered that it will depend on the costs of purchasing electricity, coal and gas.
EPS threat to GDP
The journal “Macroeconomic Analyzes and Trends” (MAT) recently announced that in 2021, EPS rapidly worsened all its balance positions compared to 2020, so its share in the gross domestic product (GDP) decreased from 2.23 percent to 1.38 percent.
It is stated that in that period EPS also reduced the gross added value (GVA) by 35 percent, as well as that the total business expenditure in 2021 was twice as high as the total and business income.
Director of the Center for Advanced Economic Studies (CEVES) Nemanja Šormaz told Bloomberg Adria TV earlier that EPS remains the number one strategic problem.
“It is imported due to bad management and currently EPS is not able to deliver a sufficient amount of electricity, so expensive electricity is imported”, he said, noting that this represents a potentially serious fiscal risk and a brake on economic growth.
Senior economist for Serbia at the World Bank, Lazar Šestović , told Bloomberg Adria that income from corporate income tax in Serbia is much higher than expected, but that by the end of the year, the Serbian budget will suffer a blow due to aid to state-owned energy companies.
“Overall, for the first seven months for which we have data, the situation is better than expected. By the end of the year, unfortunately, a significant impact on the budget is expected, because we will probably have to help public energy companies – Srbijagas and EPS. “They will have to import huge amounts of energy, at significantly higher prices than in previous years”, Šestović said earlier.
The deficit will, consequently, increase. According to him, it will probably reach the level of four percent of GDP.
“Due to the problems that existed in the EPS during last winter, we significantly increased the import of electricity and coal, and the macroeconomic effects are such that the total import of our country increases and it drags down our GDP. Srbijagas is faced with a huge jump in the price of gas on the international stock exchanges, and we know that warehouses are now being filled according to market conditions”, he noted.
The first data show a reduction in electricity consumption
“Measures for the rational consumption of electricity will be an important factor in the coming period”, said the EPS and pointed out that each of us can contribute to the energy stability of the country by making a small change in our established lifestyle habits.
EPS accepted the recommendation of the Government of Serbia to give households that save electricity from October to March discounts of 15 to 30 percent.
The value of household consumption for October will be known around November 20, when Elektrodistribucija Srbije submits the data, they add from EPS and state that the dispatch data so far show that the total consumption in October is lower by about three percent compared to the same period last year. The average daily temperature so far in October 2022 was one degree higher than the comparison period in 2021.
However, experts believe that there are better ways to help EPS out of the crisis than discounts on the electricity bills of citizens who will save. One of them could be for the state to waive part or all of the VAT on those same accounts. Experts estimate that citizens would have more returns by investing in renewable energy sources (RES) than they save in euros. They point out that one of the possible solutions would be to change the tariff system, Bloomberg Adria writes.