CZECH REPUBLIC

In the Heart of Europe


MR. FRANTISEK ŠUCHA

Interview with

MR. FRANTISEK SUCHA
Chairman of the Board and Chief Executive Officer of Zapadoceska Energetika, a.s.


ZAPADOCESKÁ ENERGETIKA

Contacts:

Guldenerova 19,
303 28 Plzen
Web Page: http://www.zce.cz
Mail: info@zce.cz

How has the fact that your company is situated in one of the fastest developing areas of the country influenced the development of your company in recent years?
There are many rural areas in this part of the country, that are less inhabited then elsewhere. On the other hand I consider this region to be very industrial. I agree with you that the region is developing really above the average, the reason for that is that we are close to the German borders and I would like to stress the importance of the newly built highway as well. Also I would like to stress all efforts and attempts made by cities and towns to attract businessmen and business activities to their areas. The development of our company is very much connected to this region. For example, we manage to set up connections to 5000 new households each year. From this amount, 80 percent of these houses are newly built, and we can make some estimation based on the statistical evidence of the increase that we have now, that within ten years the number of households connected to our system, might have the size of a middle size town, like Pilsen.

The liberalisation of the market is on the way, what are your prognoses regarding the future position of your company on the market?

The liberalisation is definitely on the way. In the first year of the liberalisation of the market we will have the possibility to sign contracts with the customers exceeding 9 GWh annually. Of course, the customers are taking advantage of this liberalisation. The distribution companies have to decrease prices on the market, the services are more extended now and the quality is on a constant increase. Concerning the future, I actually think it will be good for us. The market will operate according to the EU laws. I suppose the Czech Republic will enter the European Union in 2004 and will need to change and be in accordance with the laws in this sector in accordance with the EU laws. Concerning our company, it will bring us much additional work but on the other hand we will eventually benefit from that.

What will be the new services you will offer to the customers, in order to remain a dynamic player?

Beside the primary supply of electricity, our company focuses also on energetic audits, energy management consultancies to other companies, we support the sale of service called thermovision, i.e. heat leakage detection of buildings, we will also introduce major improvements on the quality of our electricity supplies and on the heating itself, we also provide technical help and other related services such as operation and maintenance of customers´ distribution equipment. We also support the construction projects in this region and we work closely with the operators of public lighting. We are also focusing on telecommunications. Recently, we have started a new business, which is IT technology related. Besides all that I must also emphasize our concern regarding the ecology, we have a project called green energy and now we are working on the development of new forms of heating.

Green energy and other new sources of energy could be a serious competitive advantage in the future.


For the time being we only develop it for the prestige of the company, it doesn't bring us any benefits. We are actually surprised that there are so many customers on the Czech market, but still their number is not as high as the number of customers using other sources of energy. We guarantee them that the electricity is supplied or produced in an environmentally clean way, and it will be recycled afterwards and can be used again. It's quite a new product in the Czech Republic. As far as I know, we are the only company having this kind of service in the country. The customer has to pay a little bit of additional costs for that but we guarantee that this additional cost will go to the construction of similar kind of energy suppliers.

The government plans to integrate all the distribution companies and include them into CEZ. How would you be able to use that for your benefit?

The government really has got that plan, and we are waiting when it will happen. On the other hand we cannot predict what the future of that united co-operation will actually bring. Of course, all of our steps are leading to the benefit of this company but we believe that all we do now will also be helpful in the future both for the integrated company and us.

You had a very good strategy of getting closer to the customers and this has shown already results. In this region there are a lot of foreign investors and also you are very close to the border. How close is your co-operation with foreign clients?

We don´ t make any difference between the foreign customers and local ones, they are our customers being equally important for us. Of course, we have lots of experience and a long tradition working with foreigners. We can guarantee that the new investors will have the possibility of choosing a competent electricity supplier. We can also guarantee that all the services will be on the highest level, just like anywhere else in Europe. I can also assure them that they will have good prices. Our prices in their absolute value have not changed in the past ten years. In fact they have been declining. Investors can choose from a lot of really competitive companies in the Czech Republic.

France is the second largest investor in the country, what benefits does it bring to the Czech Republic?

France has very strong positions on the international market, and plus we have always had good relationship with them. France is not only interesting for us from the historical point of view or for tourism or for the great wine they have there. Our company is also co-operating with French companies. First of all, we are buying from them some of our equipment to our distribution network. We have a good co-operation with firms of Alstom and Schneider Electric. Also we have good experience with the know how from EDF. I find it very good in an innovative company. We have implemented their know how in the field "life working on medium voltage", where EDF is the absolute number 1. We are also training our employees in those procedures, which makes us the most developed utility in this part of the country. The benefit from it, is that we don´ t have to cut off the electricity even while our specialists are working on the overhead lines or cables.

You have already reached a good level of development. What do you think, once the Czech Republic enters the EU, how strong will be your company position in the competition to the other distributors?

Once we enter the European Union I expect the competition to be on a really high level. It should be equal to the one they have in Germany and also it is natural that the laws and the regulation will have to be adapted to the EU rules. It means there are no constrains to trade, and you can only work according to the legislation.

You mentioned new services that you are already implementing what will be the ones that you are particularly proud of?

I would like to say that the energy audit is looking very interesting and it's a high demand for that service. Another interesting idea is the heat pumps, you take the heat from the ground for example or from the sea and you transfer it to the electricity for house usage. Recently this product has been very successful for us. There is still a big potential for us in the technical spheres. There are still many more customers that would like us to operate and maintain their electrical equipment. There is also an increasing number of cities or villages that we are contracting for the supply of electrical services. In this region alone there are 600 communities and so far 100 of them have been interested in using our services for the public lighting and relevant facilities. We started this offer about 1 year ago, I expect in the next 3 years to have about 50 percent of the total market in this region.

Could you give us a brief overview, what is your professional background. How did you become the head of Západoceská Energetika?

My career is not very exciting because I have worked in this company for 30 years. Before I was the Supervisor of the Technical Office and services, and step by step I have reached the top. My previous position was, Technical Director and for the past four years I have been the C.E.O. It is a challenging job. The company has dramatically changed within the past ten years. We have totally changed the services to the customers. We have completely changed our programmes in order to become more customers friendly. We have created new, modern parts of the company and tried to create a new corporate culture. Also, we have supported the development of IT technologies. We have changed the segmentation of our customers and the ways to get closer to our customers. We have completely changed our process of risk management. And at last but not the least we have totally re-organised our distribution network in recent times as we are supporting our processes by the CRM systems. So it is really a challenge.
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