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Hungary to participate in 11 Serbian hydroelectric power plants, causing a significant uproar in Serbia


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vízerőmű /Hungary to participate in 11 Serbian hydroelectric power plants

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Olvasási idő: 7 perc

The Serbian Ministry of Mining and Energy announced that no decision has been made regarding the separation of a portfolio containing a 350-megawatt hydroelectric power capacity from Elektroprivreda Srbije (EPS), the Serbian electricity industry, or the local power plants. The ministry thereby refuted speculations that eleven hydroelectric power plants would be transferred to a joint venture, led by the Hungarian MVM Group, to continue their operations.

Logical and illogical moves

In recent times, Péter Szijjártó, the Hungarian Minister of Foreign Affairs and Trade, has held multiple discussions with Dubravka Đedović, the Serbian Minister of Mining and Energy, although details about the planned Hungarian-Serbian energy joint venture have been scarce so far.

Regarding EPS, the situation stirred emotions due to reports suggesting that, at the instruction of the Special Department for Combating Corruption of the Serbian Public Prosecutor’s Office, four individuals (according to some sources) or six individuals (according to others) have been arrested for allegedly embezzling a total of precisely $7,458,050. If we were in a joking mood, we would say not a single cent less.

The puzzle is slowly coming together, with the first publicly visible piece being the transformation of the Serbian electricity industry (EPS) from a state-owned enterprise into a joint-stock company in April.

The Serbian opposition already expressed dissatisfaction at that time, suspecting that the Serbian leadership intended to sell off the Serbian electricity industry, but the grandiose „Kosovo issue” and the dual tragedy in early May diverted attention from almost everything else.


Dubravka Đedović a Pinknek nyilatkozva csupa pozitívumokról beszélt (Forrás: Screenshot)

Đedović sought to appease the dissenters by assuring them that the „formal transformation” that occurred in legal terms would bring improvement to the management of Serbian power plants, resulting in increased revenues and the ability to retain the best personnel.

The Serbian minister also added that the benefits of this would be enjoyed by consumers as well, painting an overall positive picture of the transformation. This was likely facilitated by the fact that uncomfortable questions are not typically raised to government officials during their appearances on Pink Television.

„We need to attract them with competitive salaries so that they do not leave EPS to seek employment in private companies”

stated Đedović, who emphasized that another means of retaining professionals is to provide them with opportunities for advancement.

To further allay concerns from the opposition and others, the Serbian Minister of Mining and Energy made a promise not to sell EPS.

„As the state is the owner, and as we intend for it to remain so, EPS is a giant in our economy. It is in the state’s interest, intention, and desire to protect and improve its situation”

said the Minister, aiming to dispel suspicions. He also mentioned that coal currently forms the foundation of Serbia’s energy industry, but they are considering transitioning to cleaner energy sources. 

This particularly affected the coal miners in Kolubara, who felt threatened and began protesting, demanding the reversal of the transformation into a joint-stock company and the resignation of Dubravka Đedović.

Is Serbia Paying with Hydroelectric Power Plants for Orbán’s Friendship?

Following these developments, an extraordinary meeting of the EPS (state-owned) joint-stock company’s supervisory board was convened for May 18.

The fifth item on the agenda, before „other matters,” included a proposal for the establishment of a joint venture with the Hungarian MVM Group for renewable energy production, involving the participation of eleven Serbian hydroelectric power plants.


The document, through unknown channels, reached the most significant Serbian opposition party, the Party of Freedom and Justice (SSP). Dušan Nikezić, the party’s vice president, made it public by attaching it to a statement, claiming that the privatization of EPS, the Serbian electricity industry, had secretly begun.

In the statement, Nikezić noted that this was a direct consequence of the „friendship” between Vučić and Orbán, „for which Serbia is paying with hydroelectric power plants and the privatization of EPS.

„The secret agreement placed on the agenda of the EPS Supervisory Board on Thursday obligates EPS to involve 11 hydroelectric power plants in a joint venture, in which the MVM Group will invest approximately 600 million euros in cash”

the statement read. It also stated that the Hungarians value the aforementioned hydroelectric power plants to such an extent and, on their part, they equalize the Serbian ownership stake through this investment.

The vice president of SSP added that despite the equal ownership stake, the Hungarian side proposed that a Hungarian company take control, even though they have little to no experience in the field of hydroelectric power plants. Their first power plant on the Tisza River was opened in December 2021, and they currently have a total of three such power plants, one in Hungary and two in Romania, with a modest combined capacity of only 50 MW.

According to Nikezić, this is not Hungary’s first attempt. Nearly nine months ago, the Hungarians made an even worse proposal by offering „non-existent know-how” instead of cash as their own contribution.


Dušan Nikezić tiszta vizet öntene a pohárba (Forrás: Screenshot)

The opposition politician also reminded that just a month ago, every representative of the Serbian government repeatedly stated in unison that there would be no privatization of EPS. However, it has now been revealed that the new statute was adopted precisely because of privatization, as the provision prohibiting alienation was excluded from it.

According to Nikezić, following this „harmful proposal,” the decision can ultimately be made with a single vote, which can be cast by Dubravka Đedović, the Minister of Mining and Energy, as the state becomes the sole owner after the transformation into a joint-stock company.

Therefore, the Party of Freedom and Justice has called on the management of EPS to reject the deemed harmful proposal, and demanded that the government declare a state of emergency in the bankrupt energy sector and „finally ensure professional management at the company.”

The Ministry denies and accuses

In response to this, the Serbian Ministry of Mining and Energy, which regretted the leak, announced that no decision had been made at the mentioned meeting regarding the separation of 350 megawatts of hydroelectric power plant capacity from EPS. They also denied that this capacity would be transferred to the joint venture with the Hungarian MVM Group.

The Ministry’s statement emphasized that anyone who speaks publicly about the alienation of the company’s assets spreads „false news and creates panic.”

The ministry stressed that while the agenda of the extraordinary meeting of the supervisory board included information on the establishment of a joint company with the MVM Group, no decision was made regarding the creation of such a company.

Meanwhile, further details have also been leaked, indicating that the Ovčar Banja, Međuvršje, Kokin Brod, Uvac, Potpeć, Pirot, and Vlasina power plants would be included in the Serbian-Hungarian joint venture. However, the initiative does not extend to the 1 and 2 power plants, although the Serbian opposition includes them as part of it.

Parallel to this, Željko Marković, the leader of Deloitte’s Balkan Green Energy News project, stated that the establishment of joint ventures in the region can be considered legitimate. This is evidenced by the fact that the Serbian electricity industry, i.e., EPS, and the Serb Republic in Bosnia and Herzegovina have a joint company engaged in the construction of hydroelectric power plants, named Gornja Drina.

The energy expert noted that no one rebelled when it was established in the first place, and the real problem now is not the establishment of the joint company, but rather the fact that EPS would bring hydroelectric power plants, i.e., a portion of its core assets, into the joint venture and provide land for the construction of renewable-based power plants, while the Hungarians would only invest a mere 600 million euros in this.

According to Marković, EPS needs to collaborate with the electricity industries of the region, but this should be done on an equal basis, meaning both parties should invest assets and money.

MVM is already present in Serbia, as it concluded an agreement in March last year to acquire 33.4% of Energotehnika-Južna Bačka and Elektromontaža, both belonging to the Serbian Maneks group.

The Hungarian electricity provider previously revealed its intention to strengthen its presence in Southeast Europe through a series of acquisitions and agreements, considering Serbia as its base for expansion into Bosnia and Herzegovina, Montenegro, North Macedonia, and Bulgaria.

The Serbian opposition is not pleased

Similar to the center-left Party of Freedom and Justice, the right-wing Dveri party is also unhappy with MVM’s offer. Borko Puškić, a parliamentary representative of the party, stated that the establishment of a joint venture between EPS and MVM would raise not only energy-related but also security concerns.

Puškić believes that the replacement of Zorana Mihajlović, who was considered pro-Western, as the head of the Ministry of Mining and Energy, has not brought any changes, as Dubravka Đedović continues where the former minister left off, furthering the policy of liquidating EPS.

The opposition politician believes that Đedović is an „agent of foreign interests” since she would hand over the leadership of the joint company to the Hungarians, who only possess a single hydroelectric power plant, and Norway would delegate two members to EPS’s seven-member supervisory board.

Puškić added that in this way, Norway, which has no connection to lignite and thermal power plants, and Hungary, which has no connection to hydroelectric power plants, would lead certain sectors of the Serbian electricity industry.


Dodik travels to Moscow, yet receives money from the European Union

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a megjelenés dátuma

Dodik pénzt kap az EU-tól / Dodik travels to Moscow and receives money from the EU

BALK Magazin applikáció telepítése

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Olvasási idő: 5 perc

The European Commission has lifted the suspension it imposed last year on the disbursement of EU funds intended for the Bosnian Serb Republic. Milorad , the president of the Bosnian Serb entity, expressed his gratitude to his coalition partners for their support in this matter, while the entity he leads is experiencing worsening economic conditions. The upcoming repayment of bonds issued on the Vienna Stock Exchange this year may force Dodik to take on additional significant loans. It is possible that he will seek assistance in Hungary as well.

In Brussels, they loosened their grip

Milorad Dodik, the president of the Bosnian Serb Republic, achieved a significant result on Friday, as the EU revoked the suspension of EU-funded development projects in the Serbian entity.

The disbursement of EU funds intended for the Bosnian Serb Republic had been suspended since February last year, as the EU Commission sought to exert pressure on Dodik’s Independent Social Democrats Alliance (Savez Nezavisnih Socijaldemokrata, SNSD) due to their secessionist tendencies.

Although the European Union did not impose sanctions on Bosnian Serb political leaders at that time, the Commission ordered the freezing of all projects receiving EU support.

It was already known at the time of the halt in investments, mostly related to infrastructure development, that the Serbian entity, burdened by significant debt due to bonds issued on international stock exchanges, would not be able to compensate for the resulting shortfall from its own budget.

In May of this year, several Bosnian newspapers reported that the leadership of the Bosnian Serb Republic could be in trouble if they do not find new external funding to finance their accumulated external debt.

While the risk of technical bankruptcy is not discussed in Banja Luka, it can be assumed that the EU, in plain terms, „didn’t let Dodik off the hook” and resumed the disbursement of previously frozen financial assets.

According to experts knowledgeable in the Bosnian financial sector, the EU’s restart of programs has provided a lifeline to the otherwise grim state of the Bosnian Serb economy.

However, experts agreed that the influx of EU funds alone will not be sufficient to ensure the necessary growth for financing external debt. This is because its impact does not generate enough additional GDP growth in the Bosnian Serb Republic to break free from the debt spiral.

One may ask, why did Brussels yield?

The answer, according to many, is that this step was a significant gesture towards the Bosnian Serb region on the brink of international isolation and economic collapse.

Dodik, in turn, has only earned this by fulfilling the coalition agreement he made with the Croatian Democratic Community of Bosnia and Herzegovina (Hrvatska Demokratska Zajednica Bosne i Hercegovine, HDZ BiH) and the left-wing Bosnian party alliance known as the „troika” until now.

Troubles within the coalition arise

The importance of restarting EU programs is also reflected in Dodik himself expressing gratitude, in front of the press, to Elmedin Konaković, the Bosnian Minister of Foreign Affairs, for consistently keeping the issue of restarting frozen projects in the Serbian entity on the agenda during his visits to Brussels this year.

elmedin konakovic milorad dodik 1

On the right, Elmedin Konaković, the Bosnian Minister of Foreign Affairs, plays the role of a helpful lobbyist, while on the left, Milorad Dodik, the president of the Bosnian Serb Republic, needs to be connected to a financial infusion

Simultaneously with the announcement of the financial good news, Denis Bečirović, the Bosnian member of the Bosnia and Herzegovina Presidency, also held negotiations with members of the Western Balkans Working Group of the European Parliament in Brussels.

Bečirović’s participation in the meeting caused significant disruption within the communication machinery of the Bosnian government coalition. This was because the member of the presidency asked the present EU representatives to impose further sanctions against Dodik, and he described the continuation of the disbursement of EU financial assets as a „terribly bad step.”

Regarding Bečirović’s stance against Dodik, it is worth noting that in previous years, he has repeatedly accused the top Bosnian Serb leader of separatist tendencies and violating the principles of the Dayton Agreement.

His recent actions were particularly uncomfortable for his own party, the Social Democratic Party (Socijaldemokratska Stranka, SDP), as this position completely contradicted the coalition government’s stance, including that of his own party, regarding EU funds.

Although there haven’t been similar levels of communication discord among some players within the five-party government coalition in the past, and the government seemingly continued its work uninterrupted, strong figures within the coalition parties often make comments that indicate underlying tension.

When it comes to separate communication, the SDP takes the lead, as several prominent members sharply criticize the work of the coalition partners organized on the basis of two ethnicities, the Bosnian Serb SNSD and the Croatian HDZ BiH.

The ‘unique word scattering’ observed in the communication of the SDP can be traced back to the fact that the Yugoslav state party’s successor organization in Bosnia, in addition to its traditional center-left orientation, has sought to broaden its support among progressive and neo-Marxist youth groups. These groups find it difficult to accept that the SDP, which represents a multiethnic and atheist approach they support, formed an alliance with the Bosnian Serb and Croatian conservative political forces that were continuously criticized in the previous cycle.

Dodik needs to pay (or should pay)

Regardless of the opening of EU funds, the economic situation of the Bosnian Serb Republic is difficult to assess positively.

The maturity dates of entity bonds issued on the London and Vienna stock exchanges are approaching, and their repayment will pose a significant burden on the budget of the Serb entity.

The numbers speak for themselves.

This year, the Serb entity has a bond-based debt obligation of approximately 1,099 million BAM (convertible mark), which amounts to 208 billion Hungarian forints. In addition, the government of the Bosnian Serb Republic has to pay an additional 900 million BAM (170 billion Hungarian forints) this year based on other commitments.

A significant portion of these obligations is related to certain infrastructure investments. From this year’s upcoming debt pile, a portion of the Bosnian Serb bonds issued on the Vienna Stock Exchange in previous years will mature in June. After this, the Serb entity will have to pay approximately 400 million BAM (75 billion Hungarian forints).

To ensure the financing of the mentioned debt, the Bosnian Serb Republic received a loan of 180 million BAM (34 billion Hungarian forints) from Hungary.

We have previously reported in detail about this transaction and the support program provided by the Hungarian government to Bosnian Serb agricultural entrepreneurs.

According to news reports in the Bosnian press, in order to continue rolling over the high external debt, Dodik may be preparing, or rather, be forced to take on another loan of approximately 2 billion BAM (380 billion Hungarian forints) in the near future.

Most analysts link this future transaction, which has so far been only speculation, to the Chinese development funds that are still leading in the Western Balkans region, due to the drying up of Russian resources. However, it is also possible that Dodik may once again knock on Budapest’s door for a little injection of funds.

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