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Project finance risk evaluation of the Electric power industry of Serbia


  • MakajiÄ NikoliÄ, Dragana
  • Jednak, Sandra
  • BenkoviÄ, SlaÄana
  • PoznaniÄ, Vladimir


From the aspect of the development of a country, the energy sector represents a domain of strategic interest. Generation and use of energy resources most often belongs to the public sector, and are most often under the influence of the government in most countries. This paper analyzes the risks that are characteristic to the business of the public enterprise, Electric Power Industry of Serbia (EPS). EPS has started its restructuring and is adjusting to changes and challenges imposed by the launched reforms in the energy sector. However, due to certain limitations, it is still not possible to implement its complete restructuring and modernization. The paper aims to point at the risks a potential strategic partner faces. The risks have been identified as commercial, financial and political, classification immanent for project finance, and their evaluation was done using Failure Mode and Effects Analysis (FMEA). Risk analysis was performed based on current conditions for two potential scenarios that predict different types of changes in the analyzed period. The results of the analysis show that the potential strategic partner should pay special attention to price risks, estimation, investments, project activity neglect, quasi-risks and debt collection.

Suggested Citation

  • MakajiÄ NikoliÄ, Dragana & Jednak, Sandra & BenkoviÄ, SlaÄana & PoznaniÄ, Vladimir, 2011. "Project finance risk evaluation of the Electric power industry of Serbia," Energy Policy, Elsevier, vol. 39(10), pages 6168-6177, October.
  • Handle: RePEc:eee:enepol:v:39:y:2011:i:10:p:6168-6177

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    References listed on IDEAS

    1. Jednak, Sandra & Kragulj, Dragana & Bulajic, Milica & Pittman, Russell, 2009. "Electricity reform in Serbia," Utilities Policy, Elsevier, vol. 17(1), pages 125-133, March.
    2. Hooper, Elizabeth & Medvedev, Andrei, 2009. "Electrifying integration: Electricity production and the South East Europe regional energy market," Utilities Policy, Elsevier, vol. 17(1), pages 24-33, March.
    3. Gabriele, Alberto, 2004. "Policy alternatives in reforming energy utilities in developing countries," Energy Policy, Elsevier, vol. 32(11), pages 1319-1337, July.
    4. Pollitt, Michael, 2009. "Evaluating the evidence on electricity reform: Lessons for the South East Europe (SEE) market," Utilities Policy, Elsevier, vol. 17(1), pages 13-23, March.
    5. Dunkerley, Joy, 1995. "Financing the energy sector in developing countries : Context and overview," Energy Policy, Elsevier, vol. 23(11), pages 929-939, November.
    6. Kann, Shayle, 2009. "Overcoming barriers to wind project finance in Australia," Energy Policy, Elsevier, vol. 37(8), pages 3139-3148, August.
    7. Yescombe, E. R. & Yescombe, E. R., 2002. "Principles of Project Finance," Elsevier Monographs, Elsevier, edition 1, number 9780127708515.
    8. Richard A. Brealey & Ian A. Cooper & Michel A. Habib, 1996. "Using Project Finance To Fund Infrastructure Investments," Journal of Applied Corporate Finance, Morgan Stanley, vol. 9(3), pages 25-39.
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    Cited by:

    1. Benkovic, Sladjana & Makojevic, Nikola & Jednak, Sandra, 2013. "Possibilities for development of the Electric Power Industry of Serbia through private source financing of small hydropower plants," Renewable Energy, Elsevier, vol. 50(C), pages 1053-1059.
    2. Berrada, Asmae & Loudiyi, Khalid & Zorkani, Izeddine, 2017. "Profitability, risk, and financial modeling of energy storage in residential and large scale applications," Energy, Elsevier, vol. 119(C), pages 94-109.
    3. Marko M. Mihic & Dejan C. Petrovic & Vladimir Lj. Obradovic & Aleksandar M. Vuckovic, 2015. "Project Management Maturity Analysis in the Serbian Energy Sector," Energies, MDPI, Open Access Journal, vol. 8(5), pages 1-20, May.


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