Serbia orders state utility "restructure or die"

By bne IntelliNews February 8, 2013

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Serbian Finance Minister Mladjan Dinkic told state-run power monopoly EPS on February 7 to restructure or face bankruptcy, reiterating that Belgrade refuses to bail the company out. EPS claims it is weighed down by absorbing state enforced tariff subsidies.

"The government can offer EPS only indirect moral support ... EPS must first help itself as it has capabilities to be stable with its own resources and activities on restructuring," Dinkic said, according to Reuters.

EPS says it is owed RSD120bn (€1.07bn) by customers, and blames losses of RSD33bn last year on absorbing the cost of subsidised tariffs. On February 6, EPS officials warned the utility could face bankruptcy in March or April unless it secures an emergency loan by the end of next month to meet immediate funding needs and extend debt maturities.

The finance minister, in the midst of attempting to unfreeze a bailout loan from the International Monetary Fund by reducing spending, insists EPS must stand on its own two feet, even if he apparently sees little chance that it could recoup the money its owed by consumers.

"EPS must first help itself as it has capabilities to be stable with its own resources and activities on restructuring," he said. "EPS could get rescued if, by some magic, citizens and industry decide to pay their bills but such a scenario is quite unlikely." The finance minister also said that concessions on government policy have reopened the way for new talks with the IMF.

Speakin to Tanjug, the official added that the government would not approve guarantees for a €300m loan to EPS. "The government will not approve loan guarantees for any state-run company, unless the borrowing is needed for development or new investments," Dinkic said.

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