By Ivana Sekularac
BELGRADE, Dec 2 (Reuters) - Serbia's power monopoly EPS will join with Germany's RWE to build three hydropower plants with a combined capacity of 3,000 megawatts, an EPS executive said on Wednesday.
The total investment in the projects would total around 5 billion euros ($7.54 billion) and provide the country with badly-needed power generation capacity, Dragomir Markovic, EPS general manager, told a news conference.
'(We have) signed a memorandum of understanding with RWE for the construction of hydropower plants on the Velika Morava river, the Danube and Drina river,' Markovic said.
'We need to do the feasibility study first and if it comes through the total investment in these three projects would be around five billion euros.'
Serbia needs new power production facilities to meet expected demand when the economy recovers because its power production and transmission facilities were heavily hit due to sanctions and fighting during the Balkan wars of the 1990s.
One problem in building new facilities, however, has been low regulated household electricity prices, which Markovic said deprives EPS of funds to build new capacity as well as making it more difficult for the country to attract outside investors.
Serbia's government, which sets electricity prices, didn't allow any increase in 2009 to protect people struggling with the global economic downturn, which has hit Serbia hard.
Markovic said he would push for a 10 percent jump in January and another 10 percent jump on top of that in the second half of 2010 to help make up for low rates which have contributed to EPS' planned loss in 2010 of 20 billion dinars (208.3 million euros).
'In a few days we are going to submit request for a 10 percent electricity price increase,' Markovic said. 'A price increase of more than 30 percent would put EPS back in the black.'
Markovic also said that Italy's Edison, Czech CEZ and Germany's RWE were still in the running to build two coal plants with a combined capacity of 1,050 megawatts.
The companies have asked Serbia to extend the deadline for the projects, which would represent the first new power plants built in the country in 20 years, Markovic said.
'Interested companies have asked us to extend the deadline for submitting bids, and we are ready to meet their request,' Markovic said. 'We will probably extend the deadline until April or May.'
Markovic added that government was considering a Chinese government offer for a 700 million euro loan for reconstruction of a mine and coal-fired thermal plant in Kostolac.
'We still don't have the terms for the loan, but it is something to think about,' Markovic said.
(Reporting by Ivana Sekularac. Editing by Michael Kahn and Keiron Henderson) ($1=.6635 Euro) Keywords: SERBIA POWER/ (ivana.sekularac@thomsonreuters.com; +381 11 30 44 930; Reuters Messaging; ivana.sekularac.reuters.co,@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
BELGRADE, Dec 2 (Reuters) - Serbia's power monopoly EPS will join with Germany's RWE to build three hydropower plants with a combined capacity of 3,000 megawatts, an EPS executive said on Wednesday.
The total investment in the projects would total around 5 billion euros ($7.54 billion) and provide the country with badly-needed power generation capacity, Dragomir Markovic, EPS general manager, told a news conference.
'(We have) signed a memorandum of understanding with RWE for the construction of hydropower plants on the Velika Morava river, the Danube and Drina river,' Markovic said.
'We need to do the feasibility study first and if it comes through the total investment in these three projects would be around five billion euros.'
Serbia needs new power production facilities to meet expected demand when the economy recovers because its power production and transmission facilities were heavily hit due to sanctions and fighting during the Balkan wars of the 1990s.
One problem in building new facilities, however, has been low regulated household electricity prices, which Markovic said deprives EPS of funds to build new capacity as well as making it more difficult for the country to attract outside investors.
Serbia's government, which sets electricity prices, didn't allow any increase in 2009 to protect people struggling with the global economic downturn, which has hit Serbia hard.
Markovic said he would push for a 10 percent jump in January and another 10 percent jump on top of that in the second half of 2010 to help make up for low rates which have contributed to EPS' planned loss in 2010 of 20 billion dinars (208.3 million euros).
'In a few days we are going to submit request for a 10 percent electricity price increase,' Markovic said. 'A price increase of more than 30 percent would put EPS back in the black.'
Markovic also said that Italy's Edison, Czech CEZ and Germany's RWE were still in the running to build two coal plants with a combined capacity of 1,050 megawatts.
The companies have asked Serbia to extend the deadline for the projects, which would represent the first new power plants built in the country in 20 years, Markovic said.
'Interested companies have asked us to extend the deadline for submitting bids, and we are ready to meet their request,' Markovic said. 'We will probably extend the deadline until April or May.'
Markovic added that government was considering a Chinese government offer for a 700 million euro loan for reconstruction of a mine and coal-fired thermal plant in Kostolac.
'We still don't have the terms for the loan, but it is something to think about,' Markovic said.
(Reporting by Ivana Sekularac. Editing by Michael Kahn and Keiron Henderson) ($1=.6635 Euro) Keywords: SERBIA POWER/ (ivana.sekularac@thomsonreuters.com; +381 11 30 44 930; Reuters Messaging; ivana.sekularac.reuters.co,@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.