ECONOMY

Serbia’s power giant EPS says it needs $460 million for its operations in 2002

NOVI SAD (Reuters) – Serbia’s state-owned power giant Elektroprivreda Srbije EPS said on Friday it needed $460 million for its 2002 operations, of which a lion’s share would go for overhauls and power imports. Vojislav Skundric, assistant director for production and transmission of electricity in EPS, said 10.3 billion dinars ($154.9 million) of the total would be used for overhauls of power plants this year, or 50 percent more than in 2001. «Of the 10.3 billion dinars, four billion dinars will be secured from the budget, 2.34 billion dinars from donations, 1.3 billion from credits and EPS will finance 2.65 billion dinars worth of work from its own resources,» he told a news conference and added the work would start in March. EPS, one third of whose power grid was destroyed in the 1999 NATO air campaign against Yugoslavia, needs 1.6 billion dinars to repair the remaining damage from the bombing. EPS, once a key regional exporter, became a power importer. Following the ousting of autocrat Slobodan Milosevic in October 2000, foreign donors have provided funds to help power imports and a revival of EPS, crippled by disinvestment, mismanagement, sanctions and warfare during the decade of Milosevic’s rule. Skundric said power imports would resume. «Imports next summer are needed for overhauls and next winter because output at home fails to meet domestic needs,» he said. EPS needs $121 million for 2002 power imports, he added. Skundric also said that the company’s goal was to return to its old position of selling electricity abroad but it had to operate economically. «We are fully aware that people are not ready to accept the economic price of electricity yet.. . but we will work on adjusting production costs and prices,» he said. Milosevic kept energy prices low to avoid social unrest. Foreign donors and creditors, including the International Monetary Fund, link their funding to electricity price hikes and EPS’s reconstruction. In 2001, electricity prices rose more than 40 percent. Downsizing The electricity sector is not the only one in need of restructuring and capital infusions. Serbia’s government has also announced it aims to cut 5,000 jobs, or around a quarter of the workforce, at the Bor mining and smelting complex this year as part of a program to tackle endemic problems at the copper giant. In a document obtained by Reuters on Friday, Bor also puts its own 2002 copper concentrate production at 33,600 tons. By processing bought-in concentrates, Bor will produce 55,000 tons of cathode copper this year, up from 32,365 tons last year. Bor’s current annual capacity is 600,000 tons of copper concentrate and 150,000 tons of cathode copper – the level reached in 1990. Production in the Bor complex, which employs 19,000 people in 18 factories, has declined over the last decade, due to disinvestment, economic sanctions and years of war under the rule of Slobodan Milosevic. The complex has accumulated a debt of $400 million. On Thursday, Serbian Prime Minister Zoran Djindjic and other officials visited Bor in eastern Serbia, in response to a workers’ protest a week ago in mining town Majdanpek over the planned layoffs. Djindjic, addressing around 500 Bor workers, said the company was losing $400 on each ton of copper produced, and the short-term solution was to rationalize production and sack workers. London Metal Exchange (LME) cash metal prices were at $1,521.50 a ton on Friday. «The State has prepared a social program worth 800 million dinars ($12.03 million) for the 5,000 workers who must leave the firm this year,» Djindjic said. He said the government would help finance alternative business activities like agriculture, tourism, and the wood-processing industry, as well as opening small and medium firms in the region to absorb surplus labor. Bor, like 40 other big Serbian firms, has to downsize, leaving efficient operations to the market to attract investors in a bid to revive production and survive. A Bor employee, who asked not to be named, said many workers were aware of the bleak future of the mining business and were ready to accept the offer of 6,000 dinars for each year of service.