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Understanding the financial performance of EPS: A comprehensive analysis

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To grasp the economic and financial intricacies surrounding EPS’s operations, it’s imperative to delve into its energy portfolio. Thermal power plants under EPS’s purview contribute roughly 70% of Serbia’s electrical energy, while the remaining 30% emanates from its 16 hydroelectric power plants. Over the past three and a half decades, EPS-managed power plants hit their peak annual production in 2013, delivering a whopping 37,433 GWh of electrical energy to the market.

Following a dry spell in 2022, favorable weather conditions smiled upon EPS in 2023, triggering a resurgence in production. Consequently, Serbia scarcely imported electricity last year and even managed to export certain quantities, primarily owing to exceptionally favorable hydrological conditions. Hydroelectric plants in 2023 outpaced their 2022 output by 34% and exceeded the average annual production by 12%, elevating hydroenergy’s share in total production to 36%. Notably, hydroelectric production boasts significantly lower operating costs compared to coal and gas-fired counterparts, rendering it a lucrative asset for EPS.

The second catalyst behind EPS’s substantial profit surge stems from hefty electricity price hikes for consumers. Since May 2023, industrial consumers in Serbia have grappled with electricity prices of €110 per MWh, a stark increase from €50-55 per MWh in 2021. Additionally, residential electricity prices witnessed three successive hikes of eight percent each over the past 16 months, alongside a 6.5% uptick in September 2022. Cumulatively, household electricity costs surged by 34.2% during this period. Furthermore, the 83% surge in renewable energy fees in August 2022 further augmented consumer bills, with these additional revenues flowing into EPS’s coffers.

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For accuracy’s sake, it’s worth noting that the lion’s share of the nearly €530 million profit was realized in the first half of the year, under the stewardship of Miroslav Tomašević. Upon Tomašević’s departure from the position of acting director, coal reserves stood at 1.96 million tons, a pivotal asset given that 70% of EPS’s electricity stems from coal-fired power plants. Moreover, certain entities, particularly major energy consumers under Chinese ownership such as HBIS Serbia (Smederevo Steelworks), Serbia Zijin Copper, and Serbia Zijin Mining (RTB Bor), were granted significantly discounted electricity prices by the state.

In conclusion, Serbia’s trajectory from a traditional electricity exporter to a potential net importer is underscored by evolving trends and challenges in production and supply. Amidst escalating energy prices and the ensuing economic reverberations, Serbia stands at a crossroads, tasked with navigating its energy security and sustainability amidst a rapidly changing global energy landscape.

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