According to data for 2022, the business performance results of companies majority-owned by the state have reached alarming levels. According to the latest CEES research, the two largest sectors in which state-owned enterprises operate—transport and energy—have increased their business risks. While the transport sector is characterized by a long-standing trend of negative business results, the energy sector in 2022 recorded a sharp decline in profitability, liquidity, and solvency compared to previous years. 

This was particularly driven by the deterioration in profitability, liquidity, and solvency of Elektroprivreda a.d. Nikšić in 2022, as the largest state-owned enterprise. Moreover, the consolidated financial statements of EPCG show that Elektroprivreda a.d. Nikšić, together with the companies in which it holds a majority ownership stake, recorded a loss of nine million euros in the previous year. This was largely due to significant losses incurred by CEDIS and EPCG–Solar–Gradnja d.o.o., companies majority-owned by EPCG. In addition, a significant decline in EPCG’s liquidity ratio indicates that this company (and its related legal entities) faces an increasing level of short-term liabilities falling due, while having fewer short-term assets maturing for collection.

The causes of this situation are primarily reflected in weaknesses in corporate governance, particularly insufficient transparency, direct interference by owners in management decisions in certain companies, the absence of audit committees in all companies, and similar issues. Operating costs in the energy sector have increased significantly, with one of the key factors being higher wage costs due to a substantial increase in employment. The number of employees in energy-sector companies (primarily EPCG, CEDIS, the Coal Mine, and EPCG Solar-Gradnja) increased by nearly 1,000 in 2022, which is almost 25% more than in the previous year. On the other hand, trends in electricity prices on the market, as well as difficulties in collecting receivables, have had a negative impact on the revenues of energy companies. 

The deterioration of financial results in the energy sector, together with the already negative business performance in the transport sector as the second-largest sector, will inevitably increase pressure on the budget and the state as the owner. Unless the state urgently adopts a strategy with measures to reform companies in which it holds a majority ownership stake and reforms oversight of their operations, pressure on the budget to cover the obligations of these companies is expected to continue to grow. This is already confirmed by certain budget payments made in 2022, as well as by the increased number of state guarantees planned in the 2023 budget for state-owned companies, with the final cost ultimately borne by citizens as taxpayers.

CENTER FOR ECONOMIC AND EUROPEAN STUDIES