KOPAONIK: Serbia agreed with the International Monetary Fund that it would raise electricity prices this year by 15 percent, Daehaeng Kim, the IMF country representative said on Wednesday.
Kim told an economic forum the price hike would come into effect on May 1. It will be the first since mid-2013. Serbia's government caps power prices, fearing excessive increases could fuel inflation or trigger popular discontent.
The IMF, which signed off on a 1.2 billion euro ($1.34 billion) precautionary loan deal with Serbia last month wants the country to cut spending in its public sector and to make state-run firms including the EPS power utility profitable.
Earlier, Economy Minister Zeljko Sertic told the forum that the government had adopted plans to reform EPS and Zeleznice Srbije railway operator.
Restructuring plans for the Srbijagas gas monopoly and Putevi Srbije road maintenance company would be adopted within two months, he said.
"These four companies are posing a great risk for (country's) macroeconomic stability," he said. As part of its loan-deal with the IMF, Serbia needs to offload or reform as many as 500 firms, mainly government-subsidised.
At the forum, Sertic said these companies in 2013 generated losses totalling 51 billion Serbian dinars ($490 million).
That includes EPS which has a workforce of over 30,000 people. Under the restructuring plan, EPS has already been divided into production and distribution and retail components. Serbia's energy sector has had little investment since falling into disrepair during the Balkan wars of the 1990s.
As part of a process to join the European Union, the country has also pledged to liberalize the energy sector and achieve EU power generation standards, which will require outside expertise and financing. But investors are hesitant given that power prices in Serbia remain well below market levels.
Sertic said the overhaul of EPS would include management cuts and efficiency improvements.
"The reform will not depend on how many directors' positions we will cut, but how we could make the company operate more efficiently," he said.
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