The latest edition of the Official Gazette has published changes to the methodology for determining prices related to access to electricity transmission and natural gas transportation and storage systems in Serbia.
The revisions include an increase in the coefficient used in the regulatory fee calculation formula, raising it from 1.25% to 1.50% in all three cases.
These adjustments align with agreements between the Government of Serbia and the International Monetary Fund (IMF), particularly from the third revision of their arrangement, which focuses on electricity pricing for the economy. The IMF’s March 2024 mission to Serbia highlighted that a new pricing system for gas in the “unregulated” sector should have been implemented by May 1. This obligation, however, was not met.
In response to the IMF, the Serbian Government reported in July that more time was needed to finalize accounting solutions and compensation measures for Srbijagas due to high costs from the energy crisis, including gas storage and liquidity maintenance.
The Government also noted that the gas price for the economy has been “significantly reduced” since May 1 due to the shift to a market-based pricing system, following the removal of subsidies.
What was agreed with the IMF?
The Government of Serbia committed to analyzing the adequacy of the current five percent margin and evaluating the possibility of its increase in light of future investment needs. This commitment was outlined in a report published by the IMF and covered by Biznis.rs.
Progress has been made on developing a new methodology for electricity pricing, with a deadline set for the end of August 2024 and an expected implementation date of November 1, 2024. Similarly, the methodology for determining gas prices for the economy was to be enforced starting August 1, 2024, but this deadline has not been met.
The Ministry of Mining and Energy (MRE) reported that work on the new methodologies is ongoing. The MRE stated that new methodologies for electricity and gas pricing in line with IMF requirements are under development, with the electricity pricing methodology expected to be adopted by September.
Decisions by the AERS Council
The three decisions published in the Official Gazette on August 14 address amendments to the methodology for calculating the regulatory fee within electricity transmission and gas transport and storage. The revisions, which apply from September 1, increase the coefficient in the regulatory fee calculation formula from 1.25% to 1.50%.
Impact on gas prices
Regarding gas and electricity prices, the authorities have assured that there will be no increases for households this year. Minister of Energy Dubravka Đedović Handanović confirmed on July 31 that there will be no changes in electricity and gas prices for citizens until the end of 2024.
For the economy, the new pricing methodology is expected to be in effect before November 1, providing a mechanism for EPS and Srbijagas to adjust more rapidly to market changes. Srbijagas director Dušan Bajatović also mentioned that gas prices for the economy are expected to remain stable around current levels.
