CZECH REPUBLIC
reaching maturity









Ing. Jiri Stastny, General Manager of SCE

Severoceská Energetika, a.s.

Interview with

Ing. Jirí Stastný
General Manager

February 3rd, 2000

Contact:
Teplicka 8
405 02 Decin IV, Czech Republic
Tel: 420 412 57 2201
Fax: 420 412 57 2977
Email: stastnyj@sce.cz
Web site: www.sce.cz

Could you give us first the brief historical background of Severoceska energetika?

The tradition of purchasing and selling the energy in this region is about 110 years old. As the industrialization progressed in this region near the river Labe and close to Germany, the demand of the supplying of the electric energy was growing, too. The first industries which were developing during that time were textile and coal mining industry, later on chemical and machinery industry. This development is reflected these days in the structure of our customers. The number of our customers is more than 600 000, on the territory of 7000 square meters.

From 600 000 customers is about 500 000 householders and 1700 big industrial companies. Counting from this 11 or 12 are the biggest companies like cold mining companies, paper processing company, and Czech railways, those take about 60% of all our purchased electric energy, so it is also the 60% of our turnover.

You are considered to be one of the most innovative energy distributor in the country, how would you explain it? Could you perhaps give us some example for the investments you've made?

I'm glad we have such a good reputation. I think we've done a lot for our transformation, four years ago we announced the process of changing the company with the goal to pay more attention to our customers. Our other concern was to gain the most from the fact that in our region the production of the electrical energy is concentrated.

After the political and economical changes in the beginning of the 90's, we started to learn how to sell and purchase electrical energy, how to make trade, because we are less dependent on the dominant producer and supplier of the energy comparing to the other same structured companies. Those are the main reasons why we've started to renovate and restructure the company.

Does the fact that you are close to Germany, explain it a bit?

I cannot say it was the main reason although historically this region was connected with Germany and influenced by Germany for many years, from the town of D ín to the German border is 14 km, and we are closer to Dresden than to Prague. Of course we used some German experience and basis.

The fact that we needed to renovate our technologies and equipment brought us into the contact with foreign suppliers and companies in our closest neighbourhood, Germany. Today we have the long-term cooperation with a lot of companies.

One of the priorities of the other companies we interviewed in Czech Republic, was to be closer to their customers, you began earlier than everybody, at which stage of the development are you now and what type of services do you offer to your customers?

Today we are in the second stage of our work, we announced the program of restructuring with the goal to satisfy our shareholders, after the four years we think that our information system and communication with the customer are on the expected level, comparable to the world companies.

We can provide our customers any time with information about their electricity bill, we can offer clear and reasonable bill, we offer to our customers the communication in the very cultivated surroundings, all our buildings are in the very good condition and what is the most important, after the years of preparation we can offer fluent and quality supply of energy without any breakdowns.

These things weren't that obvious 10 years ago, we'd like to keep the good conditions and develop them.

Now we have time to focus on the rationalisation of the inside processes, to decrease the expenses, create certain space and learn how to work in new conditions of the expected liberalized market. We think that in few years market here will be completely liberalized. This is a big challenge but also the big risk for us. The main risk seems to be the lost of the customer, definitely we will lose some but the company is ready to face it and in the same time is ready to find and gain some new customers.
Our readers are businessmen and they like figures, could you give us a brief review of the latest financial figures of your company, for example turnover....

Turnover in the last year was 9 billion crowns, the increase was about 2% comparing to year 98, this trend started in 1994. Speaking about technical units, in last 1 or 2 years we haven't reached the increase, it was caused by the change in the behaviour of our customers, they began to learn how to save. We are just a distributor not a producer of the energy, and the turnover reflects the level of prices. The fact that the prices of the energy are balanced explains how it is possible that the technical units are at the same level and the turnover is growing, because of the balanced prices.

The government is still implementing its privatisation program, how do you see the future of the company when we know that it is going to be the private company?

The structure of our shareholders is now as follows: about 40% of shares of the basic capital are in the hands of the German investors from different companies on the field of energy as well as the gas and 48% is in hands of National property fund which declares that will sell its share. CEZ a. s. (our major energy supplier) has about 2%.

We have several interesting acquisitions, for example our share in activities of heating companies of our region, shares in Telecommunication company, and in few other companies.

From my point of view we are operating in rather privatised environment.

Since one of the biggest industrial companies of the region is your client, how do you see the investment climate in your region?

We operate in the region with prevailing industry, the major industry is coal mining, which is now in the process of restructuring. For example Mostecká coal mining company is in the hold of the foreign investors, 50% of the Chomutov coal mining company is still in the National property fund but has been preparing for its privatisation, and this is the field of interest for the investors. The same situation is in chemical industry, companies like Chemopetrol, Czech Rafinerska , Lovochemie company, Society for chemical production in Usti nad Labem, those are all producers of primary products, we see the future of our commerce with them, and of course there is some space for investors, too.

As you mentioned earlier in the interview you are open to contacts for future investments, could you be more precise about the opportunities of the investment?

First of all we'd like to support the projects in the area of the heating industry and electrical production, we have noticed the bigger competition on the side of production, we are also interested in the field of telecommunications, because this way we can better observe the consumption of the energy. With all the other customers, suppliers and producers we'd like to work on the commercial bases. We are ready to invest to our equipment and adjust it to the needs of our customers.

As a more personal issue, Mr. Stastny, as a general manager, what has been your most satisfying personal achievement?

I wouldn't say any. I'm glad that I can work here, together with my colleagues we have been working on changing our way of thinking. For example, few years ago we didn't talk about the "customer" or "client" but about the "consumer"( who was totally dependent on us) and we didn't care whether he paid or not because the amount of money was so small that we could survive without it anyway, we didn't have any motivation, because we used to work in such conditions, few generation lived in it , and suddenly we are in a different situation. We had to explain to lot of people what the commerce means, what the customer means, and I think we've managed it.

As a final question, Mr. Stastny, what would be your message for our readers?

You should come and visit us.

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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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