New Kid on Gas Market With Own Gas Source

A new alternative supplier has arrived on the market. It is offering a 7 percent discount over the price of the Slovak gas utility.

Households can look forward to cheaper gas. As of yesterday the Slovak market has another company that is offering discounted prices compared to Slovensky plynárensky priemysel, the main supplier in Slovakia. Czech company Lama investments is luring customers with a seven-percent bonus. With large consumption, some households could save around EUR 100 a year. Even though even greater discounts are being offered by two more firms on the market, RWE and ČEZ, unlike the competition the new player is not requesting a two-year binding contract, and so customers can switch to another company twice a year free of charge. The secret of the cheaper gas is explained by sales director of the company Štefan Nižník. “This is given by the structure of costs, which has its origin also in the organisational structure of the company SPP,” he said, stating at a press conference yesterday that an example of one of the reasons is how the main supplier invests in luxury limousines for top representatives of the company.

They have their own source

photo (c) James Riden

The main supplier reacted to the arrival of new competition coldly. “All of the players on the market have their own commercial strategy, which we should not comment on, and it is up to every customers to choose the company with the best offer” said SPP spokesman Ondrej Šebesta. Other reasons given by Lama for the company’s offer is that the company, unlike SPP, is not dependent on a long-term contract with Russian gas giant Gazprom. It can therefore purchase the commodity on the spot markets, when it is cheaper. What’s more, Lama also has its own gas, extracted in the Czech Republic. The company does not want to gain customers only from the main player, but also from RWE and ČEZ. “We want to offer a higher discount, meaning that if we want to gain a client we will offer them more than a 7 percent saving” added Nižník.

Competition is working
Whereas a year ago households had no choice of gas suppliers, now they can choose from various companies. “The gas market is starting to move. It is the customer that wins from the price war” said Peter Marčan from the Institute of Energy Security. So far ČEZ has signed 25,000 contracts. The company did not say how many customers take gas from it, though, as the company focuses also on electricity supply. RWE did not wish to disclose the number of new customers. According to Marčan, the entry of the new player is a step towards making the need for price regulation for households redundant. That is the endeavour also of the Ministry of Economy, led by Juraj Miškov (SaS). For some time already the ministry has questioned the role of the regulator URSO, which at the present time still sets the prices of energies for households. The new government is convinced that competition should be putting pressure on prices and not the state. “Only a liberalised market with energues guarantees the lowest prices for Slovak households and companies” said spokesman for the Ministry of Economy, Róbert Merva.

Translation of article by Miroslav Pejko, Hospodarske Noviny, 16 June 2011

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