The red tape in Romania, one of the major shortcomings of the business environment here, has had foreign companies doing business in Romania pointing a finger to it on countless times. What are its effects, precisely?
Agip Romania, the local branch of the Italian oil giant Eni had to wait several months for all the legal procedures entailed by opening a coffee shop inside one of its gas stations to be completed, which upset its plans to open three such locations in 2003.
“We waited eight months for all formalities required by opening a coffee shop to be completed, which include the detailed urban development plan, securing the construction permit and so on. We were planning to open three coffee shops, but under the circumstances, we will dedicate our first coffee shop some time in March,” Antonio Cambiotti, Agip Romania chairman, told Ziarul Financiar.
“In Italy, for instance, a country where the red tape is stronger than in other Western countries, people say that if the authorities did not get back to you within 90 days, it means you may go ahead with your construction plans,” Cambiotti said.
The coffee shops are a profitable business for the oil operators on the retail fuel market, as are the sales of various products through their shops such as snacks, maps or soft drinks. The margins are better in these businesses compared with the fuel retail, about two thirds of which are made of taxes and duties collected by the State, sources on the oil market say.
The coffee shops to be built inside the stations in the company’s network will be named “Ciao Agip”. The average investment entailed by such a location is worth approximately 60-70,000 euros, Agip’s Romanian branch manager says.
The investments scheduled to be made in coffee shops and coffee corners inside gas station shops amount to approximately 300,000 euros. This investment plan covers the three coffee shops plus three coffee corners.
The interest of the Italian operator in developing this segment is based on its own experience with the gas station shops, where margins are very good compared with retailing fuel.
Agip Romania, which has a 20 gas station network, logged 1 million euro operating income in 2003, some 35% of which was derived from sales made by its shops, even though such sales account for a mere 10-15% in the turnover.
“A new trend is emerging in Europe among oil companies that have fuel retail operations. Practically, the oil companies are adjusting to the demands of the market and are more and more inclined to regard retail as a business in itself, be it fuels or consumer goods,” Antonio Cambiotti explains. adrian.mirsanu@zf.ro