Demostat: Price of Electricity for Economy Soon to Increase to EUR 120 per Megawatt-Hour

The Government of Serbia will soon publicly announce the decision on the new electricity price increase for the economy from EUR 95 to EUR 120 per megawatt-hour, Demostat reports.

The new price, according to this research and publishing center, will be announced long before the calendar year ends. According to the expert public, it will be a new blow to the economy, especially the part that fully depends on electricity for production, and, as usual, the costs will be shouldered by the consumers, who will face higher product and service prices.

The price increase will lead to a new inflation shock, which will further lower the already low living standard of the citizens in crisis conditions, arising from the coronavirus epidemic and the Russian military campaign in Ukraine, Demostat writes.

As a reminder, on August 30, the Government of Serbia announced that the price of electrical energy for the economy, which is supplied by Elektroprivreda Srbije (EPS), would jump from EUR 75 per megawatt-hour to EUR 95 per megawatt-hour.

Although, in Serbia, the prices of electricity for the economy, unlike those for the citizens, which are regulated, are formed in the free market, the government decided to intervene in the crisis conditions in November last year, when EPS, which is owned by the state, was ordered not to change the contracts with any of its commercial clients whose contracts were to expire that month.

The decision was then extended to December, after which it was proscribed for the price of electricity for the economy to be EUR 75 per megawatt-hour. The price applied until September 1, since when it has been EUR 95 per megawatt-hour.

As Demostat learns from sources close to the Government of Serbia, the aim of those in charge is for the price of electricity for the economy to be increased in stages in the total amount of 70%.

The energy analyst Velimir Gavrilovic has no doubts about whether the economy will react to the electricity price increase in any way other than increasing the prices of their products.

– There are plenty of industrial companies which use electricity in their production process. From bakeries, to foundries and steel mills. When the price of electricity they use in increased, those companies have no other option but to increase the prices of their products. So, due to the increase in the price of electricity for the economy, the citizens will pay more for the products they can’t do without, and the inflation will grow – Gavrilovic estimated.

According to him, not everybody in the economy will be able to withstand the increase in the price of electricity, so some companies will fail and go into bankruptcy or enter bankruptcy proceedings, whereas others will have to send employees on forced annual leaves.

The energy expert Vojislav Vuletic believes that in the situation in which the price of electricity increases, there are no conditions for the economy to reduce its expenditures, so he also points out that an increase in the price of products is inevitable.

– We are in a situation in which Serbia does not produce enough electricity for its own needs. In line with that, we are forced to import electricity from abroad, which costs money. Due to that, it is logical that the price of electricity is growing, and the economy will have to respond to it by increasing the prices of their products. That way, the burden of the electricity price increase will be put on the consumers, and the inflation will grow – said Vuletic.

Vlada Republike Srbije

Government of Serbia

Velimir Gavrilović

Vojislav Vuletić

price of electricity for the economy

increase of the price of electricity for the economy

inflation