News 01 Jul 16

Serbia Under Pressure to Cut Power Utility Staff

The government is under growing pressure to undertake painful staffing of around 4500 people and pricing reforms in Serbia’s Electric Power Industry, EPS.

Sasa Dragojlo, Milivoje Pantovic
BIRN
Belgrade

Talks between Serbian Government and IMF. Photo: Beta

The saga about restructuring Serbia's state-owned Electric Power Industry, EPS, has lasted for more than a decade, but no solution is in sight.

Both IMF and World Bank recently declared the EPS a problematic topic, warning that restructuring and financially stabilizing the state power utility needs to be speeded up if the enterprise is to have a future.

Slobodan Ruzic, a Belgrade-based energy expert, told BIRN that while dismissals are inevitable, the political will to enforce them remains missing.

“There is clearly a surplus of employees and sackings are necessary. However, almost nothing has been done for years because it does not suit the people in power,” Ruzic said. “We need the political will to conduct the reforms,” he said.

According to the public data revealed by the Electro distribution of Serbia, this company is the biggest employer in the country with more than 30.000 people who work for it.

According to the Fiscal Council of Serbia, EPS should layoff between 5000 and 10000 workers if restructuration should be done properly.

Tomas Verheijen, director of World Bank in Serbia, said on Wednesday that salaries in EPS need to be cut by 15 per cent over the next five years, which is around 4500 people.

“It's hard to become financially viable if the number of employees does not fall by the end of the year and if the cost of salaries is not reduced by 15 per cent within five years,” Verheijen said.

He added that electricity prices will have to go up if this does not happen.

“Without a applied consolidation plan, EPS by the end of 2019 will have a debt of almost 2 billion euros, which is more than the debt of Srbijagas," he added.

Nikola Altiparmarkov, from Serbia's Fiscal Council, said on Wednesday that current electricity prices are not sustainable and will have to rise if EPS is to develop.

"The price of electricity is not suitable enough to ensure an economically viable EPS which can invest in new plants," Altiparmakov said.

The price of electrical energy in Serbia is controlled by the government and with the price of 0.065 euro cents per kWh it is among the lowest in the region. Only Kosovo (0.061 cents per kWh) have the lower price then Serbia and it’s electricity network is still part of the EPS. Talks on production, distribution, and property of EPS in Kosovo are still part of the negotiation in Brussels between Belgrade and Pristina.

The price of electricity for the households in Bosnia and Herzegovina is 0.083, Croatia 0.131, Albania 0.082, FYR of Macedonia 0.084, Montenegro 0.099, Romania 0.132 and Bulgaria 0.096 euro cents per kWh.-this is data from Eurostat for 2015.

After meeting the IMF last week, Serbian Prime Minister Aleksandar Vucic declared EPS the most difficult issue in their arrangement.

"How we are going to solve things in EPS, how we are to carry out rationalization of EPS ... will be difficult but we have to deal with it,” Vucic said on June 21.

The IMF program said reorganization and systematization of EPS must be done by the end of July, and defining of new electricity prices by the end of the year.

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