The present exhaustive limitations are influencing the financial unsustainability of public utility companies and are damaging the principles of economy. Especially adverse affects were produced by the previous practice of a complex and long-lasting procedure for changing prices, and increasing service prices to compensate them up to the inflation level.
As an effect, in relation to the other local utility companies, in terms of current business conditions its undisputedly the hardest to maintain solvency in heating stations, and that they had low percents of charging favors.
Some cities in Serbia had owing to insolvency on several occasions been left without heating. On the other hand, it’s undisputed that a number of citizens are in a difficult material situation, which creates problems concerning the settling of obligations.
On Collecting Debts
Court collection measures are not a frontal attack on heating service users but a legal guard for revenues and a literal provision of a company’s preservation of operations. In Cacak, 5% of the users owe 80% of their debt of over RSD 130mn or, 1.2% (around 100 users, of over 8.000 whom we service) owing as much as RSD 50mn.
Heating is a serious item in citizens’ budgets. We have had multiple complaints of the regular payers that others aren’t paying too. What kind of message are we sending to our users if we don’t react?
That the ones that are paying, should stop paying, because we can’t touch the ones that haven’t paid us for decades? That’s how JKP Cacak filed some suggestions to the court to sell real-estate – apartments for 12 users – the biggest in the city.
Of the 12 debtors, as many as 10 came to negotiate about how to settle the debt.
The public supported these activities, which proved to be justifiable. On the other hand, citizens of weaker property status are paying utilities regularly. In Serbia we must seriously begin developing a regulatory framework for restructuring utility companies by the model of some successful private companies from the utility industry, which will create conditions for it to become financially viable and efficient.
This entails measures of a price policy, that would provide coverage of costs of business, measures of financial discipline, collecting receivables, control measures of cost productivity and efficiency, reducing the affects of policy and administration…as there are undisputedly citizens with lower earnings, we need to make auxiliary measures of social protection at local level, but so as not to jeopardize the financial viability of infrastructure systems.
That is why there is no room for politics here- heating must work regardless of who is in power.
Petar Domanovic is a member of the broader composition of the Economic Council and Managing Director of Public Utility Company Cacak.