The Supervisory Board of Elektroprivreda Srbije (EPS) adopted changes to the founding act and the new Statute, which is part of the transformation process from a public company to a closed joint-stock company fully owned by the state. The Ministry of Mining and Energy said that this is the first step towards the reform of EPS for better business, and the introduction of professional management is also foreseen.
This move, however, fueled rumors that the transition to a joint-stock company could be a step closer to privatization, but the authorities firmly denied it. The Minister of Finance, Siniša Mali, announced the strategy for the development of EPS by the end of May, the day after the Supervisory Board’s decision, and said that there is no talk of privatizing that company because it must be “the real locomotive of Serbia’s development.”
At the same time, the authorities are also thinking about hiring experts from Norway, who should give advice on the reorganization strategy on how to manage the Electric Power Company of Serbia in the best way so that it meets the goals foreseen by the transition to a joint stock company.
The President of Serbia, Aleksandar Vučić, recently spoke about this, as he pointed out his talks with Norwegian Ristad and added that for a year, they have been working to show that politics will no longer interfere in the work of EPS in any way. “You will have a Supervisory Board that will have important duties and functions, which will no longer be elected by the government making a decision, but will have much greater independence,” Vučić said for Radiotelevision of Serbia.
Transparency of Serbia warned that “the announced transformation of EPS is legally possible only if it is established beyond doubt that the company does not perform activities of general interest”.
Rajaković: The essence is in professional management
The conversion of EPS into a joint-stock company has been discussed for a long time, and this is not new news for those who are engaged in that profession, the president of the Association of Energy Engineers of Serbia, professor Nikola Rajaković, pointed out to Euronews Serbia, adding that it could have been done earlier. Where are you.
“I’m not an expert in organizing, but if I understood it, the meaning is that a joint-stock company operates according to profit principles, and a public company according to the principle of social public interest. Here, therefore, profit is more emphasized, and that is the profitable functioning of the electricity industry. Will it bring the expected changes remain to be seen,” says Rajaković.
He added that now the electricity industry is facing extremely serious tasks, because it is a “key lever of the overall energy sector of Serbia, and a company that is truly respectable”. It is a huge job for the power industry, Rajaković points out, because it must be moved away from coal and towards renewable sources.
“All this makes sense if it is the engine in the development component of the electricity industry, and if the new supervisory board and set of executive directors are on that course strong, powerful, capable and capable of completing these tasks for the benefit of all citizens of Serbia. We have potential, but there is a lot of weaknesses in the company,” said Rajaković.
He also points out that the essence is precisely in professional management because “it is good when the form follows the content, and it is good when the content corresponds to the form”. “The form is a joint-stock company, the content is how the work is carried out within it. If it is in harmony, it is ideal. Was it possible to work well in a public company? Yes, but it was not done well enough. We hope that here work better, and we look at these changes with that hope. I think we can move forward if there is a good composition of the supervisory board and good directors,” emphasizes Rajaković.
The interlocutor of Euronews Serbia believes that the Statute is an internal act that should be in the function of the external energy environment, and that a much more important part of the work is on the state, which must set the strategic energy framework, which the Statute will then copy.
“Some solutions in the Statute are interesting for me too – the shareholders’ assembly has one member, it’s kind of a contradiction, although I’m not from that story, but I reason as an ordinary citizen. At the same time, we have confusion that we want one thing and then the other, we have to do so many things, that whether trade remains in EPS or not… I think it’s important that trade remains, because that’s what makes the profit component possible,” Rajaković pointed out.
He added that the scientific community has articulated it quite well through bodies, but that “the most important thing is that we do our work with quality, conscientiously, honorably and professionally, and then everything will move forward”.
Along with this assessment, Rajaković added that he does not consider this a step towards privatization, but that “time is the only judge, so we will see where it leads”. “I am against the privatization of the electricity industry at this moment, I think we are not ready for it at this moment,” said Rajaković.
Putniković: The transition to a joint-stock company can pave the way for privatization
Jelica Putniković, editor of the Energija Balkana portal, told Euronews Serbia that there was a situation until the crisis in December 2021, in which EPS functioned as a public company, but that since that crisis, the public started talking about it a little more. How this company is managed.
The mere transformation of a public company into a joint-stock company does not mean much, Putniković points out, and emphasizes that “the state was the one who decides what will be done in EPS, who will be in a leadership position and in the supervisory board from 2000 onwards”.
“All these announcements that it will not be privatized, that there will be a professional supervisory board and management, could have been done earlier, so I don’t know what they were waiting for until now. It’s as if they are justifying why EPS was in such a situation, and on the other hand, In a way, they seem to belittle what the management has done since the crisis, because we saw that EPS started exporting electricity from the end of last year, and has been exporting it for the past three months as well… this is a much better result than before the corona virus,” says Putniković.
She referred to the fact that last year there was a lot of talk about the Norwegians coming to present the plan, and added that the plan for the development of energy was made during the previous Government.
“If the state has the idea of creating strong companies, both EPS and Srbijagas, a development strategy must first be done, but bad contractors were chosen there. Some Greeks were hired, and there were not very favorable comments in the professional public. I’m not saying that the Norwegians bad, we have our people even in that company, and in the World Bank… we have enough experts, both energy and financial, who could create a strategy for the development of energy, and that strategy, which will be ready by May,” Putniković pointed out.
Putniković believes that the transition of EPS to a joint-stock company can pave the way for privatization, but warns that this should not happen. He gives the example that Elektromreža Srbije bought part of the shares in Elektromreža in Montenegro, and that “someone could also decide to sell part of our EPS, but fortunately they didn’t”.
“The crisis has shown that the state, if it is the owner of an energy company, can make decisions in the event of a crisis in order to save the economy. Without EPS, which is strong, we actually have neither the domestic economy nor the arguments we use to invite foreign investors to come here because they have cheap electricity”, emphasized Putniković.
Speaking about President Vučić’s statement that “there is nothing against it if someone wants to enter with ten percent ownership”, Putniković points out that “delegations from various parts of the world have been coming to Đerdap for years, because no one will buy coal mines or thermal power plants tomorrow.”
If someone wanted to buy a part of EPS at this moment, she believes, they would be interested in the hydroelectric plants Đerdap 1 and 2 or the hydroelectric plants on the Drina, because that is what produces green electricity.
“These are capacities that now have a licensed production of green kilowatts that can be exported to Europe without paying CO2 taxes. For example, there are many foreign companies operating in Serbia, and they want an agreement from EPS to supply them with that very green electricity You also have the river, Đerdap Lake, reservoirs on the Drina where water is stored, and when electricity is the most expensive, you can earn the most when you produce it,” adds Putniković.
Putniković cited several examples from Europe that show, in her opinion, that Serbia should not move towards the privatization of EPS.
“The French EDF is in this crisis because it was partially privatized, and the owners, among whom are probably private, decided not to direct the profits to the revitalization of nuclear plants. Now they are in a situation where they are supporting EDF. Germany supported UNIPER. It is a little strange that let’s follow in their footsteps. Let’s remember CEZ, which was privatized and is now a state-owned company,” said Putniković.
Anyone who would buy ten percent of the capital, she added, will have some conditions, “and if we want no one to tell us what to do tomorrow, it is important that we have professional management and that no one decides for us”.
“It’s nice that both the president and the finance minister said that we won’t privatize, but let’s remember how much of a fuss was caused in the region by President Vučić’s statement that EPS was interested in expanding in the region. Everyone said they wouldn’t sell theirs, why would we “, emphasizes the interlocutor of Euronews Serbia.
She points out that, when the state has EPS under its command, it can bring professional management. “They say foreigners, and I think we have enough good experts to run EPS that we don’t need to hire foreigners to be managers,” she adds.
Putniković emphasized that with these changes to the acts, a competition is no longer mandatory when looking for a general director. “How will they know exactly who to bring there? So someone should offer their background, what they have been doing… to make a plan, what they propose to do, and be responsible if they don’t fulfill it,” concludes Putniković.
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