INTERVIEW: NIHADA GLAMOC, GENERAL MANAGER OF SARAJEVOGAS
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By: Ena COLPA
SARAJEVO, April 23 (ONASA) – General manager of Sarajevogas d.o.o. Nihada Glamoc in an interview for ONASA Agency, among other things, speaks about the comparison of gas prices in Sarajevo with the countries in the region, settlement of obligations of Sarajevogas towards BH – Gas as well as Toplane towards Sarajevogas, and the supplying capacity of Sarajevogas and possible reductions …
ONASA: Do you think that since December 1979, when Sarajevo, as the first city in BiH received natural gas, enough has been done on supplying capacity of Sarajevogas and how many users does Sarajevogas have today?
GLAMOC: Given that in the Sarajevo Canton about 80 percent of the area has been gasified, including Babin do on Bjelasnica, we believe that enough has been done on supplying capacity of the Sarajevogas.
For the remaining 20 percent of the populated areas where there has been intense construction of facilities in the post-war period, an extensive project documentation of development of gas distribution network was made in accordance with the land use plans.
For the purpose of supplying end customers 1.330 kilometers of gas distribution network was built with connections so that we currently have 54.050 active customers of natural gas.
Gas ring with three main measuring – regulation station meets the current and future needs for natural gas in the area of Sarajevo Canton.
ONASA: Is the income that Sarajevogas realized from the main operations sufficient to cover operating costs arising from the management and maintenance of highly sophisticated urban gas system and how do similar companies in the region function, for example in Croatia, Serbia, Slovenia?
GLAMOC: Main operating income of KJKP Sarajevogas are not sufficient to cover operating costs.
Operating income, which is the distribution of gas, is generated as a result of delivered quantity of natural gas and sales price.
Sale price of gas is not economic, that is, it does not provide cover of the operating costs of companies which predominantly include the costs of maintaining a highly sophisticated city gas system.
In addition to revenues from core business, which in total revenues participate around 94 percent, the company realizes other revenues with share of about 6 percent, which altogether is not enough to cover the operating costs of the above reasons.
Similar companies in the region, specifically in Croatia, Serbia and Slovenia apply regulations of the European Union which includes the regulated market of natural gas for all related energy activities.
ONASA: Almost with the beginning of each heating season the people of Sarajevo worry about whether there will be enough gas in the season, or whether there might be a reduction in the supply of this energy source with which they are “scared” by messages from the media on daily basis. What and who should make these concerns finally disappear once and for all?
GLAMOC: For significant increase in security of supply in the case of Bosnia and Herzegovina new connection, storage and LNG plants (plants of liquefied natural gas) are needed, as usual accompanying segment within the infrastructure of transport and transit of gas networks, because all inconsistencies that occur on a transport route mostly impact the supply system in the Canton of Sarajevo as the last in the supply chain.
Regularity of supplying consumers with natural gas in the Sarajevo Canton depends on the possibility settlement of obligations towards the company BH – Gas d.o.o. Sarajevo, which is solely in connection with the results of charge for supplied gas to customers, with the current large debt of KJKP Toplane – Sarajevo d.o.o. Sarajevo.
In 2015, the competent Ministry and the Government of the Canton of Sarajevo, will quite certainly have to take measures for successful payment of the current consumption of natural gas, in order for supply security of natural gas in the Sarajevo Canton, from this aspect, to be satisfactory.
ONASA: What are obligations Sarajevogas towards BH – Gas and the “Toplane” towards Sarajevogas nowadays, and is the current price of supplied gas, from the aspect of your business, market price and should someone participate in its formation?
GLAMOC: Obligations of KJKP Sarajevogas towards BH – Gas on April 7 amounted to 67.8 million BAM, obligations of KJKP Toplane towards of KJKP Sarajevogas on the same date amounted to 100.4 million BAM.
Sale price of natural gas to final consumers is not the market price, and consists of the purchase price and the price of natural gas distribution.
The purchase price of gas is formed by the gas supplier BH – Gas, and is approved by the Government of the FBiH.
When to the purchase price of gas you add the price of gas distribution which is approved by the Government of KS, you get the selling price of gas to which you add tax at the rate of 17 percent, thus forming purchase price of gas.
Price of gas distribution, or distribution difference should cover the costs of operating company.
However, the price of gas distribution is insufficient to cover operating costs, and its insufficiency causes a loss in business.
The inadequacy of the price of gas distribution has been repeatedly confirmed by independent expert bodies and committees established by the Government of KS, Professional bodies – commission of Faculty of Economics, Institute of Economics and independent auditing companies.
Thus, a general feature of prices of natural gas distribution from the post-war period to the present day it that it was never exclusively economic, but it predominantly socio acknowledged social elements.
The company regularly informs, appeals and requested assistance from the relevant authorities headed by the Government of KS, attaching all required analyzes, calculations and suggestions for overcoming this urgent problem.
As is known, the purchase price of gas was changed several times, ie the price of gas which BH – Gas charges to Sarajevogas, while the price of gas distribution, with which the company needs to cover operating costs, from November 28, 2002, remained unchanged.
Therefore, it is essential that the Government of KS in cooperation with the responsible ministry permits improvement of current tariff policy and tariff system and align it with the changes and new circumstances in the energy market.
ONASA: Can you make a comparison between a price of gas per cubic meter paid by the people of Sarajevo, or companies from the Sarajevo Canton and prices paid for the same type of service in Zagreb, Belgrade, Ljubljana?
GLAMOC: Cubic meter of gas for households in Sarajevo is 0.814 BAM, so that the company Sarajevogas delivers gas at prices almost the lowest in the region. On the list of the most expensive suppliers the first is Istra Benz Plini Koper from Slovenia which gas price is 0.868 BAM or 0.444 euros per standard cubic meter. Natural gas prices in Slovenia are formed in proportion to the achieved annual consumption of gas, i.e. tariff groups are formed according to the proportions of annual consumption of gas and are subject to frequent changes. The lowest gas price for households in the region is in Croatia and “Plinara” – Zagreb Gas delivers at the price of 0.702 BAM per standard cubic meter.
When it comes to the comparison of gas prices in the economic sector the situation is quite different.
Before the comparison it is necessary to consider the fact that BiH is exclusively supplied from imports, while sources of natural gas supply in Croatia are made up of domestic gas production in the amount of around 60 percent and imports of natural gas in the amount of around 40 percent.
The required quantities of natural gas Serbia provides with 80 percent of imports, and 20 percent of domestic production.
Unlike Croatia and Serbia, with over 30 gas distributor, in the Canton Sarajevo there is only one distributor, which is Sarajevogas.
Price of gas from Sarajevo gas is more expensive than the prices of other suppliers of gas in the region, thus the price for the economic systems in Sarajevo is 0.984 BAM per standard cubic meter, while the lowest price is in “Plinara” – Zagreb – Croatia and costs 0.672 BAM per standard cubic meter.
The tariff methodology, ie. categorization of natural gas customers is different in relation to the regional gas distributors.
For example, since 2013 in Croatia the calculation of consumption of gas is expressed for delivered energy or in kilowatt hours (kWh) instead of former cubic meters.
Since 2014 Croatian retailers introduced a new methodology for determining the amount of tariff items for the public service of gas supply and thus were introduced 12 tariff models (TM), which are formed according to proportions of annual gas consumption, and tariff models TM1, TM2, TM3 and TM4 belong to the category of households.
Differences in the prices of gas in the region are also affected by the fact that gas prices need to be converted from kilowatt hours (kWh) to standard cubic meters (Sm3), and that gas prices are converted from national currencies to BAM, and therefore may occur prices oscillations due to foreign exchange differences, regardless of price changes in the national currency.
ONASA: Who and how can untangle the Gordian debt knot in the magical triangle Toplane, Sarajevogas, BH – Gas? How are operations of these three companies affected by (non) regular payment of your clients, and who are the biggest defaulters and in what amount?
GLAMOC: Mentioned complex problems can be overcome by applying systemic long-term solutions with the commitment and active participation of the management bodies of listed companies and help of the KS Government, the FBiH Government and relevant ministries.
Specifically, in 2014 was adopted the Law on Financial Consolidation for business entities in the FBiH.
We are trying to find modalities for resolving the debt of the KJKP Sarajevogas towards the BH – Gas in the framework of this Law. The precondition for solving of the mentioned debt is the debt resolution of the KJKP Toplane towards the KJKP Sarajevogas.
Respecting the provisions of this Law was drawn up the Proposal for a study on the justification of the initiation of the financial consolidation procedure.
In order to clarify the unknown and insufficiently defined solutions under the Law, the management bodies (Supervisory Board and Assembly) have requested from the Founder clear guidelines and instructions for further action with regard to the method of initiation and application of models of financial consolidation.
Regularity of settling of consumers liabilaties significantly affects the operations of the company. All consumers or buyers of natural gas, except the KJKP Toplane settle their liabilaties in an acceptable, satisfactory terms. The level of collection of receivables from all customers except the KJKP Toplane in 2014 was about 98 percent. On the other hand, the KJKP Toplane significantly delayed settlement of liabilaties so that currently they are settling liabilaties on the basis of the supplied gas in December 2012. So, the problematic and the biggest debtor is the KJKP Toplane, which with April 7 owe to the company 100.4 million BAM.
ONASA: Lately the need for the construction of the South Stream is left aside, and up- to-date is a possibility of the construction of the Turkish Stream. How do you see both of these possibilities and which, in your opinion, variant would be more favorable for BiH, that is, your customers?
GLAMOC: For Sarajevogas the most important thing is to solve the security of gas supply of through the construction of alternative supply routes, and with the organization of the gas market in BiH certainly will come and favorable conditions for use of this energy source. (end)