The European Bank for Reconstruction and Development (EBRD) has approved a financing package of 300 million euros to support Serbia’s electricity sector, the bank announced on Wednesday (15 March).
The funds will be channelled to the state-owned electricity utility company Elektropriveda Srbije (EPS) to improve its liquidity position.
The project will support the government’s strategy to decarbonise the electricity sector, phase out coal by 2050, develop the regulatory framework for the launch of renewable energy auctions and incentivise their roll-out, and ensure both energy security and sustainability of supply, the EBRD said.
The EBRD will also establish project-related technical cooperation with EPS, including support for the development of a decarbonisation strategy and action plan, reforms to strengthen the company’s corporate governance and managerial capacity, and the implementation of climate risk reporting in line with the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations. The bank will also work with EPS on programmes for corporate and human capital development, including the retraining of workers currently employed in the coal industry, promoting female talent and attracting highly skilled employees.
Financing for technical cooperation projects is expected to be provided by international donors, multi-donor funds or the EBRD.
“In accordance with Serbia’s aspirations to achieve the decarbonisation of the energy sector by 2050, Serbia’s energy mix will have to gradually include an increasing share of energy from renewable sources. Strategic decisions lay ahead of us, as well as many reforms which will need to be implemented by state-owned companies in the energy sector,” said Dubravka Djedovic, the Minister of Energy. “Achieving these goals is not possible without sustainable financing, as represented by today’s financial package of 300 million euros signed with the EBRD. We will also use the funds to more easily overcome the energy crisis we are facing, which affects the entire world. The security of energy supply for citizens and the economy remains a priority of the Ministry of Mining and Energy, and for the government of the Republic of Serbia.”
While large-scale hydropower plants provide about 30 per cent of Serbia’s energy generation, intermittent renewables, such as wind and solar, make up less than 3 per cent.
Since 2020, the EBRD has been working with the Serbian authorities and industry stakeholders to develop renewable energy auctions through a sizeable technical assistance programme funded by the Swiss State Secretariat for Economic Affairs (SECO).
“We look forward to working with EPS and the Serbian authorities on the ambitious reform programme attached to this loan. In coordination with the International Monetary Fund and other international financial institutions and donors, we are committed to contributing to the transformation of the energy sector, turning it from a drain into a driver of the country’s green economy transition. The EBRD has a wealth of international experience in assisting with the turnaround of state-owned enterprises. We will deploy substantial technical assistance to help EPS become a more efficient and more sustainable company,” said Matteo Colangeli, EBRD Director for the Western Balkans.
No part of the EBRD loan will be used for the company’s existing coal assets. The financing will be provided in two tranches and will be guaranteed by the Ministry of Finance on behalf of the Serbian state.
To date, the EBRD has invested almost 8 billion euros in Serbia. In 2022, it provided 650 million euros, of which more than three-quarters went to projects in the private sector.