The International Monetary Fund (IMF) released its report on the third revision of the current arrangement, providing an overview of achievements, pending measures and obligations yet to be implemented.
The report highlights commitments involving Elektroprivreda Srbije and a shift in focus towards Srbijagas. The Government of Serbia intends to forgive 275 million euros in Srbijagas’ obligations and repay 216.8 million euros of loans incurred during the energy crisis. Both EPS and Srbijagas reported profits last year, with EPS nearing 800 million euros. However, the report notes that a new system for setting gas prices in the “unregulated” sector, aimed at the economy, was scheduled for implementation from May 1 but remains unfulfilled.
In response, the Serbian government cited the need for additional time to finalize accounting solutions and compensate Srbijagas for costs related to the energy crisis, including high gas storage expenses and liquidity maintenance.
To address these issues, the government decided on April 11 to cover Srbijagas’ 275 million euros in Hungarian gas storage obligations and repay two liquidity loans totaling 110.5 million and 106.3 million euros, respectively, alongside other commitments.
Regarding gas pricing, the government acknowledged a significant reduction in gas prices for the economy sector since May 1, following the removal of subsidies. They plan to assess the adequacy of the current profit margin, currently at five percent, and consider adjustments in light of future investment needs.
Work is progressing on a new methodology for determining electricity prices for the economy, scheduled for completion by the end of August and implementation by November 1, 2024. Similarly, the methodology for gas pricing in the economy sector is set to be operational by August 1, 2024.
Looking ahead, Serbia aims to develop a system to shield against excessive short-term volatility in global gas markets, aiming to sustain its attractiveness as an investment destination.
The report underscores a consultation clause in the IMF arrangement, triggered if average gas prices exceed 250 euros/MWh over a two-week period, allowing for necessary discussions and actions.
Serbia reaffirmed its commitment to fulfilling prior obligations to Srbijagas and pledged to complete Srbijagas’ business separation by the end of 2024. Amendments to the Energy Law, facilitating the establishment of an independent oversight commission for gas transmission operator Transportgas, are underway. Certification processes from the Energy Agency of Serbia and relevant EU authorities are anticipated by year-end.
In a transparency commitment, Serbia intends to publish strategic and financial plans for both EPS and Srbijagas. Monthly reporting on outstanding claims against Srbijagas and EPS, including updates from January 2022, will continue as part of ongoing discussions with the IMF on the third revision of the current arrangement.
