reaching maturity

Interview with Mr. Libor Martinek,
General Manager and
Chairman of the Board
Read our exclusive interview

Mr. Libor Martinek,
General Manager and Chairman of the Board

Plynarenska 1, 657 02 BRNO, Czech Republic
Tel: +420 5 4521 1815
Fax: +420 5 4521 1131


Company Profile

The joint stock company Jihomoravska plynarenska, (JMP, a.s.) is an authorised distributor of natural gas and provider of related services to customers of all categories in South Moravia, and the bordering of North Moravia, East and South Bohemia.

JMP, a.s. is the largest gas distribution company in the Czech Republic - it has a 25% share of the Czech natural gas market and holds a key domestic market position in terms of the volume of natural gas sold.

There are few industry sectors that can boast as long a tradition as gas manufacturing. JMP, a.s., whose history dates back to the middle of the last century, is thus without doubt among those companies building their current stability on foundations of longstanding tradition.

The Company attaches primary importance on maximum operational safety and reliability of deliveries while adhering to statutory pricing regulations. Of no less importance is the development of our distribution network, together with the connection of new customers to the gas infrastructure at acceptable cost. Company's share price growth on the stock market (reflecting economic prosperity) is another important indicator of the quality of JMP, a.s.

JMP, a.s. reported a profit in 1998 and fully recognises that stable Company growth in the present competitive environment is possible only through a deliberate and strategically orientated approach.


What position will the distribution companies hold in the liberalised natural gas market environment --this is a question asked both by distributors and the professional public. According to current trends oriented towards preparing the Czech Republic for EU accession, it is possible to foresee a need to make technical and commercial conditions in the gas industry compatible with EU norms by the year 2008.

JMP, a.s. is adapting its commercial policy well in advance of the anticipated changes, as the possibility of third-party access, the classification of authorised customers, only opening partial opening up of the market at first and other measures give rise to a range of new facts:

  • Establishment of the right to purchase natural gas directly

  • Creation of access to transport systems

  • Liberalisation of pricing policies (individualised approach)

  • Horizontal and vertical diversification of gas industry activities

  • Abolition of the natural gas delivery monopoly in given territories

  • Reduced responsibility for the renewal and development of gas equipment and deliveries of natural gas

  • Increased importance of ownership of gas equipment

  • Horizontal and vertical diversification, in particular, will mean a break with the traditional approach to the gas industry. The Company is already concentrating efforts to find new market opportunities, be they: gasification of transport, co-generation (joint heat and electricity generation), tri-generation (air conditioning joined with electricity generation), deliveries of final energy (heat, electricity) of customer services packaging.

    Comprehensive attention to the customer in the promotional phase will, in practise, mean:

  • Provision of information on the benefits and safety of using natural gas

  • Provision of information on the conditions for natural gas delivery and the offering of installation services - with the customer's potential financial participation in investment

  • Provision of information on prices

  • Provision of information on the most suitable gas appliance for a particular customer

  • Offering of direct sale of gas appliances from authorised distributors

  • All-around attention to delivered equipment for the duration of its use will mean:

  • Full servicing and maintenance - either through and maintenance - or contractual partners

  • Suitable form of insurance

  • Consulting to reduce consumption and increase the effective use of natural gas

  • Timely offering of new equipment upon its obsoleteness

  • Maximum simplification of payment terms and conditions

  • an uncompromising and individualised approach to poor payment discipline


    JMP, a.s. has all the elements of this modern style of communication. The use of information technologies and systems together with organisational change have led not only to the necessary transfer of important information in a broader organisational scope, but also to an increased quality otcommunications with higher-level organisational units.

    These factors have led to the reorganisation of regional plants (distribution and service stations), resulting in the centralisation of services in Operational & Technical Services Centres, which constitute the terminal point of information systems. Service stations - their detached workplaces - will thus carry out only operational services. The basic criterial to be met by the Operational & Technical Service Centers are:

    Geografical location

    the centre is to be in location with a natural customer catchment area and sufficient transport serviceavailibility


    the centre is to be within a certain maximum distance from the most remote municipality for the purpose of performing technical operations (e.g. emergency services)

    in the event of work stopage in a regional centre, customers must be able to be serviced by another centre

    Information systems

    every centre will be equiped with the information systems and technologies needed to ensure all operations

    Comprehensive services

    every centre must provide comprehensive services to small commercial customers and individuals within its geographic activity


    JMP, a.s is the largest regional distribution company in the Czech Republic. The Company's territorial coverage is defined by the borders of the former South Moravia. Nonetheless, in some cases our activities extend into adjacent regions depending on specific conditions - in particular, the greater density and accessibility of our networks. Clearly, the above mentioned market category in which JMP, a.s. operates is limited by the geografical location as well as the regional population.

    The degree of gasification is higher in areas with the right conditions for gas introduction gas (geo-graphical location, territorial connectibility, population density etc.)

    Although the last General Meeting decided that the rate of municipality gasification should be slowed with a view to the low return on invested funds, this "moving train" could be retarded with a great deal of difficulty. The reason for this is the financing of municipalities gasification out of individual municipality budgets, often with the support of the State Environment Fund of the Czech Republic; JMP, a.s. has virtually no influence in this respect. The Company is not able to cover all its own financing needs: this means not only incurring future liabilities connected with purchases of leased gas equipment, but also facing potential threats form the part of competitor companies operating on the natural gas market. In 1998, as a result of all measures taken the number of gasified municipalities grew again significantly, by 109. In South Moravia, 891 cities and municipalities were gasified by 31 December 1998, making for 60.7% of all municipalities in the region; 525,878 households had been connected in this stage of development (i.e. 69% of households in the region can use natural gas), while in the cities and municipalities already connected to our distribution network more than 75% of the households use natural gas.


    Information Systems and Technologies

    The JMP, a.s.'s information system, which is based on database technologies, arose through development from an unstructured transformatin of information into an on-line system, where thesystems's center is a highly efficient database server. The construction of a central data warehouse , which would include all the important data kept by JMP, a.s. and have an appropriate historical component and high degree of data safety, is projected for the near future. Modern and efficient LAN (Local Area Networks) have been created at the Company headquaters, individual plants and operational & technical centres in the interests of connecting clients to the information system. The basic "nerve centers" of all these networks are active components joined by optic cables and using modern ATM technology. The connection of individual buildings within the plant as well as of the headquaters is also done with the help of optic cabling and based on ATM technology; structured cabling is used to connect the Company's own PCs. Links between individual Company centers are ensured using leased virtual communications facilities with Frame Relay technology. In the interest of security against unauthorised access to the network, we are preparing for transfer to a more comprehensive, effecive and sophisticated security system, which wil be installed at the same time as the Customer Informatin System is introduced.

    Customer Information System (CIS)

    Customer Informatin System presently being introduced into use will bring reliability, speed, transparency and safety to the keeping of records on customers, payments, offtake points and measurement equipment at any time and at any place where this informatin is needed, i.e. in any area where the client may have a requirement. It is an open, comprehensive client/server application working in real time and based on the most up-to-date technologies using the latest knowledge of database systems and information technologies. This system has been created to enable easy co-operation with other systems in use such as the management information system, geographical information system, etc. The CIS has been developed by Plynoprojekt Praha, a.s. in close co-oeration with the specialists at JMP, a.s. This has guaranteed a product fitting the specifications and demands made on it. The introduction of the system will help JMP, a.s. to monitor improvements in services provided to customers and provide a new touchstone for analysing their needs and requirements. At the same time, the effectiveness and quality of work will improve in those sections connected to the system and using it.

    Anti-corrosion Pipeline Protection

    One of the modern technologies applied at JMP, a.s. is the use of vertical sacrificial anodes within the cathodic protection context. It is a modern method of pipeline system anti-corrosion protection which has not been used in the Czech Republic until this time. In co-operation with Gaz de France some trial anode groundings of this type were put into operation. The complete technology was taken over from Gaz de France; GdF offered technical assistance in the construction and set-up of this equipment as well. The main benefit os this method of setting up sacrificial anodes is a substantially lower space demand and thus the ability to use vertically aligned anodes in densely built-up areas.


    The outlook for further development is based on a medium-term business plan for JMP, a.s until the year 2002.

    The Company's priorities are and will continue to be:

  • the distribution and sale of natural gas to the broadest possible spectrum of customers while maintaining maximum operational safety, reliability of deliveries and legally stipulated prices

  • the development of the distribution network and connection of new customers within the Company's financial constraints

  • the economic prosperity of the Company reflected in an increased Company share price on the stock market

  • The main programme na aims which will determine and govern Company development are:

  • to complete an integrated Complany information system to expand customer services (1999 - 2001)

  • to maintain and emphasise growth of the high-pressure pipeline network to ensure the necessary capacity for sales development

  • to maintain the operational and safety capability of the gas system

  • to prepare for the sale of natural gas in energy units - kWh

  • to lay the operational/commercial foundation for Company growth

  • to build an automated system to manage the gas system

  • to commence the purchase of local networks and thereby gradually rectify the distortion in property right caused by accelerated gasification

  • to initiate an aggressive dividend policy in keeping with JMP, a.s.'s standard

  • to prepare for the introduction of the market conditions determined by the European Energy Charter (to free up 25% of the market within 5 years of the stipulated deadline)

  • to prepare and implement capital participation in economically viable projects (combined power generation projects, the use of natural gas in transport est.)

  • to conceive commercial relationships on the basis of an established tariff system

  • to increase the professional and management level of staff, thereby creating conditions in which to optimise the organisation

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    © World INvestment NEws, 2000.
    This is the electronic edition of the special country report on Czech Republic published in Forbes Global Magazine.

    October 2nd 2000 Issue.

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