Free market gnaws at giants' revenues

The free natural gas market is starting to eat into the business of the state-run giants operating in this sector.
Distrigaz Nord, the second-largest natural gas distributor and the eleventh company in Romania in terms of turnover anticipates sales worth $330 million this year, down more than 5% compared with last year.
The increase in the gas market liberalisation extent from 10% to 25% early this year caused Distrigaz Nord to lose one of its most important business partners, Azomures Targu Mures.
“The turnover decline is largely due to the fact that part of our clients have become eligible consumers this year. Azomures Targu Mures alone would have paid us 200bn ROL ($6 million) throughout this period. On the other hand, we decided to put pressure on those that did not pay their bills, but the restrictive measures turned out to cut both ways, as many thermal power plants were shut down throughout the summer, which led to lower consumption,” Victor Stefura, Distrigaz Nord general manager told Ziarul Financiar.
Distrigaz Nord’s biggest clients can now go directly to suppliers: Romgaz, Petrom or to the importers. The producers will soon include major foreign investors, such as Wintershall and Forest Oil.
The free gas market is open only to certain consumers, namely the eligible ones, which may buy at a smaller price than the captive consumers in the regulated sector.
Liberalisation may reach 33% in 2003, as on the electricity market at the moment.
The two natural gas distribution companies, Distrigaz Nord and Distrigaz Sud will be privatised by 2004, as pledged by the Romanian authorities to the international bodies.
Distrigaz Nord will supply some 4.1 billion cubic metres of natural gas to its consumers this year, covering 20 counties in northern Romania.
Domestic consumption is estimated at 15.8 billion cubic metres this year, 22% of which is covered by Russian gases, and the rest by Romgaz and SNP Petrom. Distrigaz Nord will import 700 million cubic metres of natural gases this year.