EPS on the right track and operating positively, cooperation with FS welcome

Letter from Miroslav Tomašević, Acting Director of JP EPS, to Pavle Petrović, President of the Fiscal Council

Dear Mr. Petrović,
With full appreciation for your knowledge and expertise, as well as the position of the president of the Fiscal Council, I am addressing you with regard to your statements that created a wrong public image about the current operations of Elektroprivreda Srbije. It is obvious that the basis for your conclusions about EPS operations were partial or incorrect information.
EPS was in crisis, however, since the last quarter of 2022, it has been operating positively, and at that time a positive result of RSD 5.8 billion dinars was recorded. Thanks to the measures aimed at stabilising operations in 2022, a cost reduction of RSD 24 billion was achieved. Savings of RSD 1.5 billion were recorded by streamlining public procurements. In 2022, EPS management has undertaken a number of initiatives to overcome legacy problems. These steps were primarily aimed at stabilising coal production and securing imports of the missing coal quantities. Thanks to the discontinuous coal mining in the Kolubara Coal Basin, additional coal quantities were provided from mines operated by EPS, thus reducing coal imports from the planned 2.1 million to 1.4 million tons.
The positive trend and record results in electricity generation have also continued this year. This year, EPS achieved a revenue of almost EUR 30 million from electricity trade on the free market. More than a year ago, there were many problems in the TPP sector, nonetheless urgent measures were taken. Results ensued. One such result is the 17.7 percent higher generation of the TENT branch in the first two months of this year than in the same period last year.
Estimates of business operations in 2023 are also positive, because in this year, revenue of about RSD 500 billion and a profit of RSD 20 billion are planned, which will enable the financial stabilisation to continue and the company to grow.
In early 2022, EPS faced one of the biggest global energy crises. Electricity prices both on regional and European power exchanges skyrocketed. Nonetheless, Serbia’s economy and citizens did not feel these surges. Price increases were minimal. Even now, households in Serbia are paying the lowest electricity prices in the region and the EU. Businesses outside Serbia faced prices that went over 500 euros per megawatt-hour, and our businessmen were protected by Serbian Government measures. At the same time, in accordance with the Energy Law, electricity price for commercial supply should be formed based on market principles, while prices for businesses are significantly lower than market prices.
The fact that business improvement measures are yielding results is also supported by the trend of reducing electricity purchases outside EPS. In January and February this year, EPS purchased only 175 GWh on the free market, which is five times less than in the same period of 2022. On 2 March, EPS reached a daily record in electricity sales on the free market of EUR 4.06 million. These days, Serbia is the largest net exporter of electricity in SEE. Please note that estimates that EPS will have to import 10 to 15 percent of electricity or coal in the coming years are incorrect, because the total planned electricity amount to be imported (coal imports or electricity purchases) is minimal. More precisely, in 2023, up to 5 percent of total consumption in Serbia, in 2024, up to 4 percent of total consumption in Serbia, and in 2025, up to 2 percent of total consumption in Serbia.
Investments in new capacities, especially RES, are a priority of EPS strategy and operations, and our largest energy company should have the support of society, institutions, and therefore the Fiscal Council as it is making its way down this path. EPS does not sleep and wait for someone else to make its investment plan. By investing our own efforts and knowledge, we created the Go Green Road of EPS, a document facilitating adaptation of EPS operations to the energy transition conditions. Based on this document, the total planned investments from 2022 to 2035 are EUR 8.5 billion. Investment realisation in 2022 was some EUR 450 million, while from now until 2035, more than EUR 8 billion remain to be invested. Our Go Green Road envisages implementation of new, key RES investment projects, together with the phaseout of obsolete lignite capacities, making this pivot towards green energy possible. The plan is to reduce CO2 emissions from EPS power plants by 25 percent until 2035 by investing into wind farms, solar parks, hydropower plants and high-efficiency thermal power plants. Our predictions coincide with two scenarios from the draft Integrated National Energy and Climate Plan. The Go Green Road of EPS is possible and realistic.
As an electrical engineer with many years of experience both in EPS and in private companies, and a person who is on the ground every day both in mines and power plants, I can responsibly say that EPS has exceptional experts because otherwise we would not be able to overcome numerous legacy problems and achieve positive results.
Obviously, we do not shy away from advice and help, and that is why we formed the Scientific Council and the Technical Council of EPS, including the most eminent experts of Serbian energy sector. The goal is for the profession and science to provide the best solutions for energy transition.
To allow you to have all information and full updates, because you are mainly referring to the 2021 and 2022 data, I invite you and your associates to visit EPS because we are open to cooperation, good-natured criticism and constructive suggestions. With undoubted appreciation for your own opinion and influence on public opinion, I expect you to consider the positive results of EPS and support measures to improve operations of Serbia’s largest energy company.

Miroslav Tomašević
Acting Director of JP EPS