Serbia has given a guarantee to the German Development Bank KfW that it will assume the debts of EPS on the basis of the loan taken, if this company is unable to settle its obligations. Energy company Srbia (EPS) concluded an agreement with KfW Bank on a loan of up to 100 million euros in June this year.
Due to reduced electricity production and increased imports, KfW offered a loan “with a guarantee for the payment of the Republic of Serbia”. The money from the loan will not be used for capital investments related to fossil resources, it is stated in the explanation of the proposed Law on providing guarantees.
As stated in the explanation of the Bill on guaranteeing, the business of EPS has worsened due to problems with primary energy production, the hydrological situation and reduced operation of hydroelectric power plants, the import of electricity at record high market prices, as well as low prices for guaranteed supply.
The problems in EPS date back to the last quarter of 2021, it added.
The reduced production of electricity in the last quarter of 2021 and in 2022 caused an increase in the procurement of the profession, so the missing quantities of EPS were mostly replaced by imports.
In addition to saving EPS liquidity, the loan should also be used for the decarbonization strategy and action plan for EPS, including the strategy of phasing out coal until 2050.
The money from the loan will be disbursed in one tranche, and EPS should repay in 15 semi-annual installments, with the first principal repayment date being March 15, 2026, and the last date defined as March 15th, 2033.
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