There is no doubt that Mero CR is a strategic company of the country. Could you give us a historical background of the company?
The history of Mero is quite short because it was established on 1 January 1994. It was created by combination of the company called PetroTrans, which owned the pipeline Druzba and of the company called Mero IKL which was building Ingolshtad pipeline. So at present Mero CR owns two pipelines, one is Druzba which is 35 years old and five year-old pipeline which is called Ingolstad or IKL.
You know our readers are businessmen and they like figures, so if you can give us a brief overview about your financial results, such as your turnover, the figures for last year and your expectations for 1999?
Our turnover is at the average about 1.7 billion CZK and as far as profit we are reaching relatively low one mostly because of the decline in the transport in oil. In 1998 we had profit of 50 million and about for 1999 we do not have the definitive figures yet but we suppose the profit would be in tens of millions only. But because we know that the last year we had historically the lowest level of the transport of oil so we can expect that the profit would be lower than in 1998.
What were the main reasons for that decline?
The main reason are imports because about 50% of the needs of the Czech market is covered by imports of the oil products, while in 1996 it was only about 30%. So the result is that in the Czech refineries the production goes down and because our main activity is to transport, we don't transport that much.
The fact is also that Ceska Rafinerska is loosing its market share against foreign rafineries. Since you are operating the Druzba pipeline which brings the oil from Russia, did the Russian crisis affect your business and how did you face it?
I wouldn't say that we are influenced by the Russian crisis because we are just the transporters. And since the very beginning we have about 80% of the transport through Druzba, which is from ex-Soviet terrritories and only 20% goes through IKL pipeline. And for your interest sometimes the Russian oil goes even through this IKL pipeline.
Do you plan to extend the 20% share of the IKL pipeline?
Yes we would like to, but it depends on Ceska Rafinerska because we are just the transporters of whatever Ceska Rafinerska orders, so if they order more, yes.
So you said you had a decline in terms of figures, in terms of turnover. Could you give us the main guidelines of your strategy in order to face that context and where you see the future growth of your company?
We have already started to do not only transport, but also telecommunications because we own an optical cable which goes along both pipelines, both Druzba and IKL. Already in the last year the turnover from telecommucation services was 110 mil. CZK.
And when did you start that diversification?
We started in 1997 when we had the turnover of 3 mil CZK and in 1998 we already had 30 mil and as I said last year it was 110 mil and this year we intend to have 200 mil CZK.
Was it your idea to diversify into the telecommunication sector?
It was also my idea but we may say that it was the idea of the top management which was here in 1995 to 1996 when I was a financial director here.
Could you be more precise about the telecommunication project, what are your future plans concerning that area, and I know that you are working with some foreign partners in that subject, for example Dutch Telecom ?
It is not only Dutch Telecom ; we cooperate with
all foreign partners who are on the Czech market
and what we do is that we are providing or offering
our telecommunication ways or possibilities for
all of them. We use top technology like Lucent technology
and we are really following the technological advancements.
Well, maybe it would be useful to know that we do
not have competitors in this respect because we
are the only company which owns the telecommunication
possibilities on all the territory. At the beginning
it was very important, but now it is not that advantageous
because in Germany everybody has an access to Deutsche
Telecom, but at the beginning that was very important. |
If I am correct the company is still state owned. Is there a plan to privatize it?
According to the government it was decided that at least until 2002 there will not be any decisions made concerning privatization.
Why is this?
I don't know. Maybe to speak about one more project, we own two pipelines and all together they are able to transport 20 million tons of oil a year, which means that we are using only about 30% of our capacity, which is unfortunate. The plan which is interesting for us is to reverse transport of the IKL pipeline, which would transport cheaper Russian oil to Germany. Right now you are at the provocative point because Ceska Rafinerska and their boss Unipetrol are against this since it would allow competitors in Germany to get to cheaper oil. But we believe that this is not just in their particular interest but in the interest of the Czech Rpublic. We should implement this project because that would bring us and the Czech Republic much more money, payment for transport and so on.
And when is this project going to be implemented?
In our heads and in our tables it is already prepared for the end of 2001 or 2002. An American who represents a fund which is willing to pay for the feasibility study is coming on February 22nd. That is our way to overcome the problems with those who do not want this project to go through, because if the Czech Republic hear it from independent sources, maybe it will help the project. It is a bit a political decision and therefore particular interest groups are involved in it.
Our readers are always interested in new business opportunities -- in which areas of your activities would you be interested to attract some investments or some partners?
The project for reversal transport will involve investment into equipment, then the controlling communication systems and 15 km of pipelines to the Esso refinary. This is one possibility. The second possibility are telecommunications and that would be both the new technologies and cooperation with companies which operate on this market. We know that in telecommunications the possibilites are much higher than what we are involved with, in spite of the comparative results in this respect, in large part because our 110 million CZK turnover from telecommunication services is done by only 3 people. That is all our telecommunication department. First they find clients for our telecommunication routes and then they implement investments for 100 mil CZK/year.
Mr.Franc, I would like to ask you maybe a more global question about the Czech Republic. Since you are the general manager of strategic company of your country, what do you believe is the future of the Czech economy ?
It is something like our telecommunications. I see that we have enormous possibilities and the issue is how to use them and I am positive in this view. The potential is especially in Czechs as the people because there is a lot in it. The issue is that there are still a lot of bureaucratic obstacles and the system is keeping the creativity low. I would like to mention that the prime minister is interested in development and we on the corporate level are interested in moving ahead. Nevertheless, we are experiencing a period where it is sometimes a very difficult and long process to get through.
What has been your most satisfying personal achievement since you became the general manager of Mero Czech Republic ?
I have been in Mero for five years. I used to be a financial director, then afterwards a director of our subsidiary in Germany, now I am a general manager. And I have been on this top position for 16 months. So I believe that the most satisfying things are still ahead. And that is the reversal transport towards the west. If I would make it, I would be happy, satisfied and only afterwards I can speak about any achievement.
What would be your final message to our readers ?
I would say that they should place their trust in the Czech Republic. There are great opportunities here, "gold" is everywhere, and it is necessary just to collect it by investing here, as well as believing and trusting the Czech people who are able to develop the economy. |
