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EPS achieves historic profit: What contributed to the turnaround?

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The Serbian state-owned power utility, Elektroprivreda Srbije (EPS), marked a historic financial result last year, boasting a profit of 114.6 billion dinars, equivalent to around 980 million euros. This significant turnaround has been emphasized by Dubravka Đedović Handanović, the Minister of Energy and Mining. Notably, EPS had concluded the year 2022 with a loss of 73.7 billion dinars (approximately 630 million euros) and had experienced losses in the preceding years as well.

The remarkable transformation in EPS’s financial performance within just one year has drawn attention. Experts attribute this success to several key factors. Firstly, the increased electricity prices for both consumers and businesses, along with substantial electricity exports at high prices, significantly contributed to EPS’s profitability. Favorable hydrological conditions also played a crucial role, leading to abundant production from hydroelectric power plants, although such conditions are not consistent annually.

According to data from the Republic Institute of Statistics (RZS), Serbia exported electrical energy worth 1.274 billion euros in the previous year, reflecting the substantial revenues from international sales. Željko Marković, a specialist from the company “Sitek,” highlighted the dominance of two factors in EPS’s high profitability during the past year.

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“Firstly, the high electricity prices, resulting from the energy crisis, ranged from 150 to 180 euros per megawatt-hour for long-term deliveries, depending on the type of product. Secondly, the exceptionally favorable hydrological situation enabled EPS to achieve sufficient production, both for the domestic market and for sale in neighboring markets,” explained Marković.

Milojko Arsić, a professor at the Faculty of Economics in Belgrade, emphasized that the increased profitability of EPS is attributable to various factors, including higher electricity prices and increased production from hydroelectric plants, which incur lower costs for the company. Additionally, reduced domestic consumption due to a mild winter also contributed to the improved financial performance.

It is essential to analyze the profitability of coal production, considering that Serbia imported coal last year. Arsić suggests assessing the profitability of coal-based production to gain insights into its impact on EPS’s overall financial performance.

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