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Serbia: A hike in electricity prices is probably unnecessary

, News Serbia Energy

Electricity and gas prices for households and businesses in Serbia have approached the levels of market prices on the European exchange, and a new price increase in May will probably not be necessary, even though it is a recommendation of the International Monetary Fund (IMF) according to the stand-by arrangement, energy experts said today.

Energy consultant Željko Marković, regarding the statement by the President of Serbia, Aleksandar Vučić, that electricity and gas will not become more expensive, said that the prices of these energy sources on the global market are falling, so the IMF’s recommendation for an electricity price increase in May this year by eight percent and gas by ten percent, will probably not need to be implemented.

“The IMF’s recommendations have a binding force, but each, at the moment when it needs to be implemented, is verified by a price analysis, and if no correction is needed, such an explanation will be presented. According to current trends, electricity should not become more expensive,” said Marković.

Vučić said last night on RTS that there will not be a new rise in energy prices so Serbia remains attractive to foreign investors.

Marković said that the IMF, in its stand-by arrangement with Serbia, recommended that electricity for households become more expensive at a moment when it was far below the market price.

“In the meantime, electricity has been becoming more expensive in Serbia, and its price has been slowly approaching the market level, but the market price also increased due to the energy crisis. Now, the market price of electricity is falling,” said Marković.

He added that last year the average price of electricity on the European market was about 110 euros per megawatt-hour (MWh), which is now also the price paid by businesses in Serbia, while households still pay a somewhat lower price than that market rate.

Since the price of electricity on the exchange continues to fall, a new increase for households, as he said, ‘will probably not be necessary as things stand now.

“The price of electricity being contracted for the year 2025 has now fallen to 76 euros per MWh, which is approximately what households are currently paying. The price for households, and businesses as well, remains among the lowest, at the lower threshold in Europe,” said Marković.

He added that “there was a delay in making adjustments and prices were kept below the market level, which is why the IMF insisted on paying the market price so that Elektroprivreda Srbije (EPS) wouldn’t finance this difference and then seek state aid.”

Marković mentioned that a similar situation exists with the price of gas, which is falling in the market and probably won’t require significant correction, and that analysis will certainly be conducted at the moment when the decision needs to be implemented.

Gas now on the exchange, as he mentioned, costs 25 euros per MWh, and it was far more expensive before.

Energy expert Miloš Zdravković pointed out that with the increase in electricity prices in Serbia for households, the European level has been reached.

“Electricity should not become more expensive regardless of the IMF’s recommendation, which most easily resorts to adjusting that price because it is the easiest to collect and it fills the budget from taxes,” said Zdravković.

In mid-2022, energy sources were sold at record prices, with electricity costing 700-800 euros per MWh, and gas at nearly 300 euros per MWh, meaning 1,000 cubic meters cost 3,360 dollars.

Up until 2021 and the energy crisis, electricity cost between 50-100 euros per MWh, and 1,000 cubic meters of gas cost 426 dollars.

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