E.ON Romania is celebrating this year 10 years of presence in Romania. It has been a decade of continuous challenges, of adjustment and evolution, Frank Hajdinjak, CEO E.ON România said for energynomics.ro. “10 years when we we managed to overcome every hurdle confidently, which has made us stronger and more prepared for the future”. What’s next, we asked. E.On România will focus on finding new solutions for its customers, flexible products according to the specificity of the customers and their needs.
E.ON is celebrating this year 10 years on the energy market in Romania. Apart from figures, what have been the most significant achievements of the company during these 10 years?
In these 10 years we have gone through important stages which strengthened the company’s business and which helped us become an important player on the energy market.
At the same time, we kept the promises we made on coming to Romania, that is, that we would be a long term strategic investor which would contribute to the modernization of the Romanian energy sector.
All these years we have invested approximately EUR 1.3 bn in Romania, mainly in modernizing and rehabilitating gas and power grids. The effects of these investments have been confirmed by the latest ANRE report on the quality of the energy distribution service, which highlights an overarching improvement under this chapter.
Moreover, as the Ministry of Energy has recently confirmed too, we have not only attained the investment objectives we undertook on taking over the two former state-owned distribution companies, but we have even gone beyond them!
At the same time, we have also been a fair taxpayer to the state budget, which is shown by the approximately EUR 1.4 bn we transferred to the state budget as taxes and fees.
Thus, due to the achievements and progress we have made in Romania, we are now ranking among the most important Regional Units within the E.ON Group, alongside Germany, UK, Sweden and the Czech Republic!
It is also worthwhile to mention our involvement in corporate social responsibility projects as an essential part of our presence on the market. We have supported with over EUR 7.8 mln numerous projects dedicated to the communities where we carry out our business, the total number of the beneficiaries of such initiatives amounting to approximately 235,000.
What are the most important challenges you have identified as CEO of E.ON Romania? Please refer to them taking into account the main markets where E.ON is active: distribution, trading, supply. Are they related to customers, infrastructure, regulations and legislation?
First, not far from here a conflict is unfolding whose consequences have already been felt in the erratic reduction in the gas delivery from Russia to Europe in the dead of winter, a thing which has led to serious disturbances at regional level. We cannot rule out the continuation of this situation in 2015.
On the domestic level, we have no certainty that investments in the economy will increase sufficiently to contribute to an increase in the GDP and we hope that the authorities will not introduce new taxes or increase the existing ones – a thing which brings us back to the old discussion about the need of legislative and fiscal stability and predictability.
The problems of the energy sector continues to be related to the decreasing consumption and to cashing in invoices. The causes for this decrease in consumption can be found in the reduction in the activity of several industrial sectors, especially those consuming much energy, as well as in the worsening of the financial situation of important consumers, many of which are followed by the initiation of the insolvency procedure.
In the context of market liberalization, one of E.ON’s priorities for the upcoming period is to consolidate and develop its client portfolio by promoting gas and electricity offers including also additional services and products tailored to their needs.
What are the company’s objectives for the upcoming period, both in Romania and in the region? (on short and medium to long term). The Group is preparing for new approaches; what would they mean for the operations in Romania?
Last year the consolidated turnover of the E.ON group companies in Romania amounted to RON 4.83 bn (about EUR 1.08 bn), slightly exceeding the 2013 turnover. The natural gas and electricity volumes we sold amounted to 29.6 TWh, keeping the previous year’s level.
For this year we are targeting an increasing turnover, provided that the volumes distributed get stabilized, after a descending trend in recent years.
We must continue finding solutions for our customers, offering flexible products according to the specificity of the customers and their needs, developing projects for the communities where we think we can have local authorities as our partners. Actually, we want to add more services to our portfolio so that we may become a “one stop shop” for the customers we serve.
We are also considering new business models for the medium term, such as generation of distributed energy (smaller scale generation projects, closer to the consumption place).
On the whole, we weigh opportunities and carefully analyse those which might fit into our business plans.
How would you describe the current Romanian energy landscape, with all the decisions and half-steps taken back by the Romanian au-thorities with respect to renewables, with the renewed pressure and previous commitments for investments, smart metering and consump-tion decrease?
Romania stands all the chances to become an important player on the energy market in South-Eastern Europe, but in order for such objective to turn real, a smart, clear and coherent strategy is needed for building interconnections with the neighbouring countries and for capitalizing on all the resources the country has.
In order to maintain the advantage of the low dependence on imports and in order to benefit from the existing potential, the energy sector needs huge amounts to invest in production and infrastructure.
On the other hand, in order to attract investments, the authorities have to decide on the energy mix we are to rely on in the future, on the priority projects and on the means to finance them.
Although renewable generation capacities, especially wind power and photovoltaic capacities, have had an impressive development in recent years, Romania must ensure its energy security, that is there must be something to turn on if the wind stops blowing or there is no sunshine.
The state’s support doesn’t have to limit itself to certain high power generation capacities, a complex package of measures is needed to stimulate the investments necessary to the energy sector, with a major impact on Romania’s economic resurgence. Such an example is the infrastructure, because, once it is produced, energy has to get to the consumer and, without significant investments in the coming years, infrastructure will not be able to cope adequately.
The decrease in the energy consumption in recent years, the changes in the support scheme for the renewable energy production, levying new taxes are not at all the right signal to make investments. Instability complicates the running of long term projects and disheartens investors.
In your opinion, smart metering is going to help or to clog your efforts toward a better use of the power distribution grid in the trouble-some areas which have high rates of illegal consumption?
Last year we initiated an ample smart metering implementation project, with benefits both for the consumers and for the company, by reducing the losses on our grids.
We will install over 256,000 meters by 2017 in the counties of Bacău and Neamţ, areas where energy losses are significant. The EUR 21.6 million worth investment will lead to a decrease in operational costs by remote meter connection/disconnection and reading, and also by making energy balances.
The company’s medium and long term programs provide for the allocation, during 2015-2020, of RON 85 mln for the continuation of the implementa-tion of the SMART GRID concept (automation of distribution grids, both of the transformer stations and of the medium voltage grids).
Early this year we marked the completion of a major investment program “Modernization and integration into the SCADA system of the transformer stations of E.ON Distribuţie Romania”, a program co-financed by the European Union and the Romanian Government.
The total value of the project amounts to approximately RON 35 mln, out of which RON 13.3 mln being the value of the subsidy, while the difference of RON 21.7 mln was covered by the company’s own funds.
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The full version of this article can be read in printed edition of energynomics.ro Magazine, issued on June 2015.
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