Croatian Electric Power Company soon to light up Kraljevo and Valjevo - No change in suppliers before payment of multi-milion debts to EPS

The news thatCroatian Electric Power Company (HEP) is entering Serbian electricity markethas caused a lot of dust in the last few days. Althoughthis company was selected as the most favorable bidder in May and June of thisyear in supplying with electricity public lightning and cityfountains in Kraljevo and Valjevo and public lightning and traffic lights inValjevo this news became popular in the last few dayssince Croatian Electric Power Company has recentlyannounced that Cimos has already supplying with electricity in Serbia and thatsoon electricity delivery will start for these two cities.

Tina Jakasa,head at HEP Opskrbe, confirmedfor our portal that they are preparing for the supply of electricity forValjevo and Kraljevo.

- We were the most favorablebidder on tenders that those local self-governments conducted. Contractswere signed mid this year and we expect that implementation will begin by theend of this month or by mid-December - Jakas told for eKapija.

Both contracts weresigned for 12 months. Thecontract value with Kraljevo is RSD 66,265,000 excluding VAT, while Valjevosigned a contract in the amount of RSD 22,966,348.20 without tax.

As our interlocutorexplains, Serbian market is important for further development of HEP Opskrba and HEP Energija which operates in Serbia, and currentlythey are focused on large customers, companies, and industrial plants.

Kraljevo andValjevo on reserve supply

On the occasion of theannouncement from HEP that final preparations for implementation of twoprojects have been in progress, the Electric Power Company of Serbia (EPS),which was one of the participants in both tenders reacted first and then theMinistry of Energy followed.

Namely,as announced by EPS, which currently supplies with electricity these two localgovernments, change of supplier with this energy source is not possible beforedebt settlement. Asmentioned, these two cities owe more than tens of millions of dinars to thispublic company, and, it is added, "it is not a rare phenomenon thatcustomers who have outstanding and significant debts try to avoid paying theirobligations by public procurement," and "the intention in such case tochange supplier when they have not been paying their bills to the currentsupplier for a long time. "

Asthis public company communicated to eKapija, Kraljevo and Valjevo are still on reservesupply. However,to the question of why there has been no reaction from EPS so far, given thatthe procurement was carried out, we did not get an answer, but we were told"they cannot provide additional information other than those mentioned inthe statement".

According to the report,"EPS, like other suppliers, participates in tenders of large commercialbuyers, with a price below the market when it comes to this category ofcustomers. According to Eurostat data, commercial prices according to consumptionlevel in H1 2017 are higher in Croatia than in Serbia by as much as 28.6%, whenit comes to consumption of 500,000 to 2 million kWh. "

No change before debt settlement

On this occasion, the Minister ofEnergy Aleksandar Antic spoke. According to Beta, he said on Thursday (November23, 2017) that these two cities will not be able to change the supplier ofelectricity from public lighting until they first settle their debts to EPS.Antic pointed out that the Energy Lawforesaw such situations and prohibited the change of suppliers if there wereany debts to the first supplier.

- Kraljevo and Valjevo, when itcomes to public lighting, will not be able to change supplier until it settlesthe total debts according to the previous one. What would it look like whenanyone who owes someone to electricity or gas at one point said - well, I willnow change supplier and have me supplying someone else - the minister said, accordingto Beta.

Public procurement forelectricity supply in Kraljevo, besides HEP, was also delivered by EPS, whosebid was rejected because it exceeded planned amount of public procurement. On tenderin Valjevo, apart from these two companies, NIS participated.

In the City Administration of Kraljevo for our portal they say that public procurement was according to procedure and that the offer of HEP was more favorable than the one provided by EPS. As the mayor Predrag Terzic explains for eKapija, supply of EPS exceeded the value of public procurement by more than 5% of planned, which would, as a domestic producer, enable them to seek additional procedures.

- It does not matter to us from whom we will get electricity, but we get it at a lower price, which is certainly the one offered by the Croatian Electric Power Supply (HEP). We now owe to EPS about 15 m and we will pay this amount as soon as possible – Terzic says for eKapija.

We did not receive answers from the City Administration of Valjevo until the publication of this text.We remind you that electricity market in Serbia has been open since January 1, 2015, which means that all buyers have the right to choose a supplier. Currently, 106 suppliers are involved in it, of which 43 are for wholesale electricity.As stated in the EPS statement, this public company supplies 98% of the market for commercial electricity customers.

Katarina Stevanovic

Elektroprivreda Srbije ad Beograd

Grad Valjevo

Grad Kraljevo

HEP-Hrvatska elektroprivreda d.d Zagreb

Ministarstvo rudarstva i energetike Republike Srbije

Hep energija d.o.o. Beograd

NIS a.d. Novi Sad

Electric Power Industry of Serbia

EPS

City of Valjevo

City of Kraljevo

Croatian Electric Power Company

Elektroprivreda Hrvatske

HEP

HEP Supply

HEP Energija

HEP Trade Belgrade

Ministry of Energy

Cimos

Tina Jakasa

Aleksandar Antić

Predrag Terzic

electricity market

electricity supply

electricity

electricity purchase

electricity market liberalization

public lighting Kraljevo

public lighting Valjevo