"The level of water in rivers is so low that hydroelectric power stations are working at minimum capacity," Dragan Vignevic, an official from Serbian electricity company EPS, was quoted as saying by the Tanjug agency.

According to Vignevic, electricity production has been cut by 60 percent while more and more consumers are turning on their air conditioning as temperatures remain consistently over 30 degrees Celsius (85 degrees Farenheit).

As the drought is adversely affecting neighbouring countries, Serbia is unable to import electricity, Vignevic said.

Navigation on the Danube river has become difficult for larger boats as the water level drops.

Crops are expected to be down by at least 40 percent on 2002 as a result of the drought, and will not be adequate for Serbia's domestic demand, according to economics expert Vladana Hamovic.

In neighbouring Montenegro, politically joined with Serbia, the government has banned the extraction of sand and gravel from certain rivers because of the drought and temperatures above 40 degrees Celsius.

TERRA.WIRE