Croatia: Power company HEP, Transformation project lead by PWC may bring 50MEUR cost saving annually

, SEE Energy News

Croatian power company Hrvatska Elektroprivreda d.d. (HEP) has ended the first phase of its operational and strategic transformation process in which HEP’s measures and cost saving potentials were identified and estimated to 50MEUR annually. Transformation process, comprised of three phases, is being implemented by PWC, and started at the end of May (late May).

Targeted cost saving potential, around 400-500 mil HRK, will be accomplished by optimization of manageable costs, more specifically through almost 50 different measures, which are currently being developed and prepared for implementation, and which primarily consider optimization of production and support activities, including heating.

Transformation process, comprised of three phases, is being implemented by PWC, and started at the end of May (late May).

The second phase is currently running, consisting of elaboration of measures that need to be carried out, and it should be finished by middle of October. After that, follows the third and final phase of measures implementation, which should last nine months.

As HEP reports, measures refer to improvement of business processes and production facilities management, establishment of new organization of work and business processes in thermal power plants production and maintenance, minimizing existing activity and responsibility duplication in certain functions, as well as targeted investments in network and IT support.

As far as planned cost saving is concerned, HEP reports that part of it refers to production optimization, suggesting that optimization possibilities also exist in heating sector, which, due to its strict regulatory framework, has amounted app. 2 billion HRK of loss, and that administration optimization is being performed as well.

Reorganization of distribution process is also planned, as an independent process.

Namely, intensive work is being performed in reorganizing HEP’s dependent societies and sectors, aiming at management flexibility enhancement and strengthening of all market functions of HEP. The goal is to maintain strong position in the local market, and to prepare for a focused step into regional markets, said HEP officials, who didn’t want to say about the measures in detail, until they are additionally developed in second transformational phase and internally presented within Group.