Business News

Gas Distributors Lowering Prices as Gen-I Enters Market

Ljubljana, 01 October (STA) - New competition from GEN-I has seriously stirred up the Slovenian gas market, as the company, formerly only an electricity distributor, has managed to secure a 10% share of the households supply market in a mere two weeks and has forced other distributors to follow suit and cut prices.

GEN-I, which entered the market on 13 September with prices that were "15-19% cheaper than the competition", reported on Monday that it had received more than 10,000 applications for a change of gas supplier in the first two weeks and thus already secured a 10% share of the market for households.

It moreover announced it would cut prices by another 10% by the end of the year and that its price for a cubic metre of gas would not exceed EUR 0.3999 by July next year, after which it could be reduced even further.

GEN-I, which buys its gas from three "major energy companies from Europe", stressed that its gas does not cross potentially unreliable Ukrainian territory.

The first to react to GEN-I's competition was Energetika Ljubljana, which announced on 26 September an initial 10% cut, which it hopes to upgrade by a further 10% in 2013.

Energetika Ljubljana, whose retail market share in 2011 was at 7.82%, acknowledged it remained 10% dearer than GEN-I, but added that it first needed to analyse how many clients it lost in the past month and wait for the outcome of negotiates with its suppler Geoplin.

Geoplin, which sources gas from Russia's Gazprom, has been dominating the Slovenian market, having a 62.20% share in 2011. It has not yet officially responded to the new developments.

With GEN-I estimating that last year's gas consumption in Slovenia was at 120 million m3 for households and 180 million m3 for companies, Energetika Ljubljana director Hrvoje Drašković said that "the key is not in clashing over these 300 million m3, but in expanding the consumption".

"I hope the new trader will understand that it needs to accept responsibility and expand the market, including the retail market, or else we will clash with each other," he said, pointing to a potential transition of users from heating oil to gas.

Energy trader Petrol - Petrol's market share in 2011 was 5.47% and Petrol Energetika's 3.23% - followed Energetika Ljubljana a day later, announcing a cut of 13-15% and additional bonuses for the bundled use of its services.

The average user of Petrol-supplied gas will for instance receive around EUR 80 in bonuses a month, which can be used to buy any products, including petrol, at Petrol's stations.

Petrol said it was able to secure the cut as a result of lower gas prices on the market, which are tied tothe prices of petroleum products and the dollar-euro exchange ratio. It added that negotiations with its supplier, who agreed to cutting prices, also contributed.

Energetika Celje (2.57% market share in 2011) and Plinarna Maribor (5.61%) also announced cuts today, by around 15% and 20% respectively.

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