Business results EPS in 2024 they showed a sharp drop in profitability: from 958 million euros in 2023 profit fell to only 200 million euros.
The business plans of EPS predicted a significantly higher profit: before the dismissal of the general director Miroslav Tomašević in May 2023, the company's management planned a profit in 2024 of 77 billion dinars (650 million euros), writes Bogdan Petrović in The new economy.
The new management of EPS, headed by Dušan Živković, revised downward the plans, so they predicted a profit of 54 billion dinars (460 million euros), and the profit at the end of last year was more than twice lower than the revised plans for last year.
Part of EPS's record profit in 2023 was a consequence of the state's payment of almost 300 million euros as compensation to EPS, which, based on government decisions, sold electricity to the economy in 2022 and 2023 at prices well below market prices.
Production failure
The real reason for such a big failure is problems in electricity production. The drop in production is partly the result of natural factors that EPS could not influence, but there were also production problems in thermal power plants.
The great drought during the summer led to a decrease in the production of electricity from hydropower plants.
In addition, high summer temperatures caused electricity consumption to be higher due to the operation of air conditioners, which led to increased electricity imports. The import of electricity during the day was not "expensive", because the prices of electricity on the market in Europe were very low due to the sudden increase in the capacity of solar power plants, but in the evening hours the prices would skyrocket, even up to 700-800 euros per megawatt-hour, i.e. more than 10 times more expensive than during daylight hours.
EPS somehow "overcame" that situation by increasing the operation of hydroelectric power plants in the evening hours. The experts from EPS must be recognized for having managed to reduce the import of electricity when it was the most expensive by skilfully managing the system and using reserves in hydroelectric power plants, so that they significantly reduced the cost of buying electricity on the market.
At the beginning of winter, problems in the production of electricity in thermal power plants, which are the key to security of supply, escalated. There are several reasons for this: thermal power plants have not been seriously invested in for decades, the discovery of new coal deposits is delayed, while the coal that is currently being used is of increasingly poor quality (lower calorific value). A large number of thermal power plants are over 50 years old, so their production is not only energy inefficient but also unreliable. Only at the end of the previous summer, after more than 30 years, a new 350 MW thermoblock in Kostolac was connected to the grid (for the first few months, the block worked in trial mode).
That is why it is not surprising that at the end of the year there were (only seemingly unexpected) problems: in December and January, Serbia was forced to import up to a third of the required electricity at certain times. This could potentially have been a huge problem, had there been a shortage of electricity in Europe, but at that moment there was electricity available on the market at favorable prices due to relatively high temperatures in the west of Europe and significant wind power generation in the North Sea.
Major problems in the production of electricity in thermal power plants began when large amounts of snow fell in December, increasing the moisture content of coal (albeit of relatively poor quality) in the landfills, which apparently led to interruptions in production at several aggregates in the Obrenovac thermal power plants. It is ungrateful to assess whether better management of the power plants in those circumstances would have prevented the failure of certain units in Obrenovac and reduced losses in electricity production, but it is indicative that EPS was "silent" about the reasons for the large drop in production and the enormous import of electricity despite the commissioning of the new unit in Kostolac.
An improvement in the supply of coal can only come when EPS begins full exploitation of the new Radljevo mine in the Kolubara basin, but things are not too good there either. The deadline for reaching the full capacity of the coal mine has been moved from the fall of this year to the fall of next year. The reasons for the delay have not been made public.
It should be noted that no "renewable" sources would solve the problems in providing electricity, because the days when EPS had to import enormous amounts of electricity were without sun and wind.
No one is responsible for bad results
Financial statements best show the true state of the company. The dramatic drop in profitability compared to the previous year, as well as compared to the business plan, best shows that EPS is facing serious problems.
It is not bad to remind that both President Vučić and relevant ministers (Zorana Mihajlović and Dubravka Đedović) announced "miracles" from the transformation of EPS from a public company into a joint-stock company.
That "miracle" happened in the spring of 2023, when a new supervisory board of EPS was formed where, in addition to three of our citizens, three "experts" from Norway were appointed, along with a union representative. And instead of an improvement in the company's work, or at least greater transparency in the work of the largest and most important state-owned enterprise, the opposite happened: EPS records a drop in production and profitability, information about EPS's work is more than scarce, and the members of the Supervisory Board seem to have fallen into the ground.
In a joint-stock company in which good corporate practice is applied, such a large failure in financial and production results would lead to a change of management, unless it was justified by serious reasons or force majeure. Not only the director but also the Supervisory Board would be responsible for bad business results; in Norway, after such results, all members of the administration would be replaced. But as we know, no one was held accountable for such bad results, nor was the public given an adequate explanation for the bad business.
Of course, no "transformation" into a joint-stock company by itself will produce results as long as the state interferes in the work of the company. The current leadership of the EPS cannot "resist" the pressures coming from the top of the state. This is no wonder, when we know that the previous director of EPS, Miroslav Tomašević, who showed very good results, was dismissed without explanation, at the first session of the new Supervisory Board, without these "experts" even getting to know each other.
