EBRD provides €300 million to Serbia’s electricity sector

• EBRD provides liquidity to Serbia’s state-owned electrical utility, EPS
• Project to accelerate wind and solar power, strengthen decarbonisation and governance
• EBRD invested €650 million in Serbia in 2022, bringing total to almost €8 billion

The EBRD has approved a financing package of €300 million to help support Serbia’s electricity sector.

The funds will be channelled to national electricity utility 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 signing of the loan and guarantee agreements in Belgrade today was attended by Minister of Energy Dubravka Djedovic, Minister of Finance Sinisa Mali and EPS General Manager Miroslav Tomašević. On behalf of the EBRD, the agreements were signed by Matteo Colangeli, Director, Regional Head of the Western Balkans, and Grzegorz Zieliński, Director, Head of Energy Europe.

The EBRD will also provide project-related technical cooperation to EPS, including support for the development of a decarbonisation strategy and action plan; reforms to strengthen the company’s corporate governance and managerial capacity; the implementation of climate risk reporting in line with Task Force on Climate-Related Financial Disclosures (TCFD) recommendations; and 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.

Dubravka Djedovic, the Minister of Energy, said: “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. Achieving these goals is not possible without sustainable financing, as represented by today's financial package of €300 million 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.”

Matteo Colangeli, EBRD Director for the Western Balkans, said: “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.”

Grzegorz Zieliński, EBRD Director for Energy Europe, said: “Energy security and the green energy transition are the key challenges faced by power utilities across Europe. Through this transaction, the EBRD is pleased to assist both EPS and the entire energy sector of Serbia in overcoming these urgent challenges.”

While large-scale hydro power 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 and have the potential to help the country develop substantial new, clean domestic energy supply.

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).

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 in Serbia. In 2022 alone, it provided €650 million, of which more than three-quarters went to projects in the private sector.