At the start of December, the asset and liability inventory of JP Srbijagas officially began, in line with a decision made by the general director in September. The goal of this inventory is to clearly outline the company’s financial standing by examining its activities, including transportation, distribution, supply and non-energy operations, according to the December edition of the company newsletter.
Srbijagas, the second-largest state-owned energy company in Serbia, follows Elektroprivreda Srbije (EPS) in terms of obligations guaranteed by the state. As of September 30, these obligations totaled 548.6 million euros. Over the past year, the focus of the International Monetary Fund (IMF) has shifted from EPS to Srbijagas, and the company’s operations have come under greater scrutiny as part of this transition.
Nataša Sekulić Vidak, the head of the census at Srbijagas, confirmed that 40 census commissions began the asset and liability inventory process in December. The deadline for submitting the final report is January 24, 2025. This regular inventory process will assess the situation as of December 31, focusing on various activities such as the transportation of natural gas, distribution management, and other common balance positions.
While the inventory is part of the annual process, the IMF has been pushing for the separation of Srbijagas’ operations into distinct sectors: distribution and trade on one side, and transportation and gas storage on the other. This directive aligns with the government’s commitment under the third revision of Serbia’s stand-by arrangement with the IMF, which promised that the separation would be completed by the end of 2024. Following the adoption of amendments to the Law on Energy on November 27, Srbijagas is working toward the certification of its gas transportation company, Transgas (Transportgas), by both the national Energy Agency and the EU authorities by the end of 2024.
Despite these efforts, the IMF noted delays in the process but acknowledged the steps taken by the government to strengthen the resilience of Serbia’s energy sector. The IMF’s December report stated that Serbia aims to confirm the completion of Transgas’ separation in 2025, in line with its obligations to the EU.
However, the issue of Srbijagas’ rising debt remains a concern. As of September 2024, the company had liabilities totaling 546.8 million euros, making it the second-largest debtor among state-owned enterprises. The Serbian government has promised the IMF that it will keep the deficit within 3% of GDP in 2025 and will not issue guarantees for liquidity borrowing, except for financing specific projects. For 2025, the budget includes a guarantee for a loan of 113 million euros for the expansion of the gas pipeline network, as well as guarantees for a 42 million euro loan for a gas pipeline project to North Macedonia.
In addition to these loans, Srbijagas is repaying existing debts, including a 27.3 million euro installment to Merrill Lynch International for the financing of its natural gas and electricity procurement. The company is also facing repayments of 177.5 million euros for 25 active loans, nearly equivalent to the total of loans for infrastructure projects from the China Export-Import Bank.
To cover these debts, Srbijagas has primarily borrowed from domestic banks, including AIK, UniCredit, Banca Intesa, OTP, and Raiffeisen. The loans have been used to fund various infrastructure projects, including gas pipelines to North Macedonia, Bulgaria, and Hungary, as well as local pipeline developments. Some of the borrowing has also been used to manage liquidity.
The ongoing inventory and financial challenges come at a time when the company is facing increasing pressure from both the IMF and the Serbian government to manage its debts and meet EU obligations.
