In anticipation of June 8, the day on which, judging by numerous media reports, local elections will be held, the attention of our public is directed towards the City of Zaječar and the Municipality of Kosjerić. This now traditional event is held in these two local governments. We will try to take advantage of the attention and offer you some insights regarding energy and the environment through examples from Zaječar and Kosjerić. Some examples concern the energy of the community (utility sector) and some will indicate the role that good energy decision-makers can play in the energy of households, that is, of private individuals.
As these traditional manifestations almost always end in deep darkness (namely, polling stations close in the evening), we will start with light, i.e. with public lighting. This energy service, which is a pure public good, enjoyed by every member of the community, and which usually takes a few percent of local budgets, has been improved in the City of Zaječar with the help of a private partner.
The City of Zaječar stated in the Decision on the final account of the budget for 2020 that 92 million dinars were spent for the “Management/maintenance of public lighting” activity. Approximately 63.5 million was spent on “fixed costs” and approximately 28.5 million on current repairs and maintenance. Total budget expenditures in that year amounted to slightly more than 2 billion dinars. The Energy Agency claims that in that year the average realized price of electricity for public lighting without VAT and tax, which was achieved on the free market, was 7.98 dinars.
In the Decision on the final account of the budget for the year 2023, it was stated that 127 million dinars were spent to perform the activity “Management/maintenance of public lighting”. Approximately 45 million was spent on “fixed costs” and approximately 82 million on current repairs and maintenance. Total budget expenditures in that year amounted to slightly more than 2 billion dinars. The Energy Agency claims that in 2023, the average realized price of electricity for public lighting without VAT and tax on the free market was 17.08 dinars.
The public-private partnership for the replacement, rationalization and maintenance of part of the public lighting system by applying energy saving measures in the territory of the City of Zaječar is entered into based on the Decision of the Assembly of the City of Zaječar dated 18.12.2020. According to media reports, the contract was signed in January 2021, and according to the decision, the most favorable was the group of bidders Petrol doo Belgrade, Smart Energy Investment Kft branch of SEI Belgrade, Smart Energy Investment Kft Budapest, MB with subcontractor MAXWELL GROUP doo Belgrade.
We did not find the contract (or other contracts concluded by the City of Zaječar with private partners), the public call procedure, or information about the name of the special purpose company that was created after the conclusion of this contract on the Public Procurement Portal. Details of the procurement can be found on the website of the City of Zaječar, which is transparent, contains many data that enable monitoring the transparency of work over a long period of time, and which is relatively easy to access. Unfortunately, the browser considers it unsafe. According to the public call documentation, the subject of the contract was the replacement and implementation of 9,399 lamps and the installation of 155 candelabra and lamps on the public lighting system in the city, out of a total of 9,538 lamps that make up the entire public lighting system, whose replacement is justified and expedient.
What we know: In the official gazette and on the website of the City of Zaječar, it is possible to find data from the offer as it is transmitted by the minutes on the opening of offers. We selected four numbers:
- the reference annual electricity consumption on the basis of which the savings were calculated is 5,701,747.00 kWh
- the projection of annual electricity consumption amounts to 970,638.82 kWh
- the total annual fee to the private partner amounts to EUR 456,508.70
- estimated benefits for the City in the amount of EUR 74,315.37
What else do we know based on the available data on public procurement of electricity for public lighting that the City of Zaječar implements:
- in the public procurement from 2020, it was stated that the estimated consumption in 2018 was 4,900,000 kWh
- in the public procurement from 2024, it is stated that the estimated consumption for the period of the new contract is 1,146,185 kWh.
ESCO arrangements can have many benefits, such as identifying and evaluating potential savings, developing engineering solutions and detailed specifications, managing the project from concept development to installation, workforce training and maintenance, guaranteeing that savings will cover project costs, and facilitating financing.
Do energy efficiency improvement projects in the public lighting system that are technically relatively simple and have highly reliable parameters for predicting future results really require a private partner? For some future decision-makers about good energy in the new Serbian society, no such decisions have been left because Zaječar is only one in a long line of cities and municipalities in which the financing of such an intervention and the collection of most of the benefits is left to private partners through ESCO arrangements.
At the session of the City Assembly where the Decision on the selection of a private partner for light was made, the procedure for the selection of a private partner for heat was initiated. More on that in the next post.