What is your current
assessment of the Czech energy sector in general
and in your region in particular?
The Czech energy sector and CEZ are undergoing
positive developments, but some problems still
remain and some things are not clear yet. Some
issues have been unclear since 1994, the privatization
for example, some others have to be decided on
and are not definite yet, which means that we
still do not know how CEZ will be structured in
the future and who will have the decision making
power.
Czech energy companies are undergoing a big change,
which is the liberalization of the market. We
are still at the beginning of the liberalization
process, the first step of which was taken on
1st January 2002, which concerned only big clients
consuming more than 40 gigawatt per hour during
the year. We still have to take new steps to broaden
the scope of the liberalization. This will happen
soon, on 1st January 2003, when the liberalization
will be extended to clients consuming more than
9 gigawatt per hour during the year. The full
liberalization should, according to the Czech
legislation, happen on 1st January 2006. This,
however, still depends on several factors, one
of them being the European parliament, which will
allow the liberalization of the electricity market.
What actions are you taking to be ready for
this liberalization, so that your company can
compete on this new market?
We have begun this process in 1998, when we approved
the first intention of liberalization of the electricity
market. Since then, there have been some major
changes in the company, mostly organizational,
to make a difference between regulated and non-regulated
customers. We also developed an independent project,
which should make the trade with electrical energy
ready. We have created new products under a new
trademark called Ellion. We still have to solve
the access for our clients.
There are still some changes ahead of us. The
most important change is the way of thinking of
our employees: we have to change from a monopoly
to a company, which should serve its clients and
should take our clients as its most fundamental
asset.
You experienced a very strong growth last
year both in turnover and profit. How can you
manage to keep this growth of turnover and profit
in a changing market?
The process of liberalization has already started
and I can already tell you that this year's turnover
is higher than last year's. Furthermore we are
doing everything we can and taking all the needed
steps to continue on this way. Our aim consists
of having the same share on the Czech electricity
market and if possible to grow it. If we lose
some customers in our region, we want to compensate
this difference with customers gained outside
of our region. This is why we have created a new
range of products, which we are now intensively
offering to our existing costumers and also to
potential customers.
Speaking about this new product range, are
you mainly targeting residential or business customers?
The liberalization is of course taking place
step by step and in the end we will try to target
the whole range of costumers. However, we now
have to target the ones, who can choose their
own distributor. We therefore concentrate on bigger
clients, but as the liberalization will proceed,
we will also concentrate on smaller clients.
Is it also an issue for you to diversify and
enter different markets additionally to your core
business?
We will try to do this in the future as other
international energy companies did and we will
try to do some activities outside of the regulated
field. However, we are trying to be very careful
in this field following an old Czech saying, which
says that one should stick to the things that
one really knows. Therefore, we are now trying
to have new products in the area we already know.
I don't believe we will go to a completely different
sector.
A crucial element in any company is the people
you have and the people you work with. Are you
cooperating with universities or research centres
to develop more skilled personnel for your company?
This is not a problem for the moment, but I am
a little concerned for the future as the younger
generation is not really interested in technical
schools. This concerns not only people with university
degrees, but also factory workers. However, I
am trying to be an optimist and I believe that
when these positions will need to be filled, many
people will turn to technical schools and universities
again and I hope that in the meanwhile the situation
will not be critical.
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Along with the liberalization, another important
issue for the Czech Republic is the EU integration.
How do you expect this to impact your company?
This will bring certain risks, but also many opportunities.
The new organizational structure of CEZ will determine
whether it will be able to compete with the large
European energy companies. This is also the reason
why we are looking for a strategic partner to
cooperate on the European market. I believe that
CEZ can play an important role on the electricity
market.
However, this can also have a negative impact
in the Czech Republic, where the main question
is to know how the liberalized market will work.
I believe that it should not only be liberated
on a European level, but also in the Czech Republic.
There is currently an intention from the government
to regroup the energy companies in the country,
as far as the production and the distribution
of energy is concerned, but I don't think this
would be very good for the domestic market. Some
companies on an international level are vertically
integrated and there is still competition in these
countries, but I don't think there would be competition
in the Czech Republic if there were only one Czech
company. I believe that we have to find a suitable
compromise to succeed on the international market,
but also to have a balanced and competitive market
at home. This is not an easy issue and has been
discussed ever since 1994.
Speaking about strategic partners, how are
you developing contacts to bring more contracts
and partnerships to your company?
We have cooperated with foreign companies since
1991 and this has also brought us some contacts.
The best cooperation we have had is with Vattenfall,
a Swedish company, which even owned a share of
our company and was the second largest shareholder
in our company in the mid-nineties. I must say
that Vattenfall has helped us a lot, especially
to prepare for the liberalization of the market
as they had a good experience as their home market
is 100% liberalized. Unfortunately, a decision
of the Czech government and the whole privatization
process made this company very nervous and they
decided to sell their share.
They sold it to E.on, a German company, and we
now try to have the same level of cooperation
with E.on. Our experience with E.on is quite good
so far.
You have spent 25 years in this company climbing
the ladder step by step to the top. During these
years, what was your most difficult moment and
how did you overcome it?
It is always very difficult to assess oneself.
I believe that the most important issue in my
work is the preparation of our company for a liberalized
market. This was the most deciding issue and it
is a very important change for Czech energy companies,
who need a completely new attitude and new methods.
We very much value the help we received from international
investors.
There have also been some failures on this way
and one of the biggest failures is the change
in the way people think, which has not been completed
yet.
What did you learn out of this failure?
Patience. This cannot be changed over night or
by an order and it is therefore very helpful to
have education, which helps to change this. As
this company was a monopoly in the past, you have
to change people's habits.
I like to think that business is like playing
chess and you always have to predict your next
move. So what will be your next move?
A good chess player does not tell anybody what
his next move will be. There are many possible
variants on a chessboard and there are many variants
here too and I would like our next couple of steps
to make check mat the persons against whom we
are playing.
There are also many outside factors, which we
cannot predict such as the restructuring of the
Czech energy companies, the finalization of the
privatization and other similar issues. However,
we have agreed on a principle, which is to prepare
the company as well as we can for restructuring.
What would be your final message to the potential
investors, which will be reading ths report?
Let's compete on the European energy market.
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