(Details, context, quotes)
BELGRADE Aug 31 Serbia will increase retail
electricity prices by 3.8 percent, Energy Minister Aleksandar
Antic said on Wednesday, announcing a rise of about half the
level demanded by the International Monetary Fund in return for
Antic told reporters the price hike was the "smallest
possible". Last year's 12 percent increase was also short of the
level demanded by the international lender.
Serbia's government is under pressure to bring public debt
of around 74 percent of GDP under control even as growth in the
Balkan country of 7 million remains sluggish at a time when
living standards are under pressure.
In return for the 1.2 billion euro ($1.34 billion) loan last
year, Serbia promised to prune bloated state enterprises with a
view to making them profitable. The price increases will come
into effect on Oct. 1.
"We will try to make (power company) EPS profitable by other
means," Antic added, including by cutting expenditure, reducing
power transmission losses and by cracking down on late payments.
The IMF executive board is expected to approve Serbia's
current loan programme at a quarterly review meeting at its
Washington headquarters later on Wednesday.
Successive Serbian governments, determined to keep
electricity prices low to avoid social discontent, have heavily
subsidised EPS through banking guarantees. But low prices and
huge losses in transmission have crippled investment. Its newest
power plant was built 25 years ago.
Pressure on EPS, which employs more than 30,000 people, has
grown since Serbia opened its energy market to foreign
competition in 2015. It posted a profit of 7 billion dinars
($63.33 million) last year.
EPS still produces all of Serbia's annual consumption of 38
gigawatt hours, more than two-thirds of it in coal-fired plants.
Some 30 percent comes from hydro power pants.
($1 = 0.8961 euros)
(Reporting by Ivana Sekularac, Editing by Thomas Escritt and