Croatia: Second phase of Power utility HEP transformation commencing

9. January 2015. / SEE Energy News

In the Croatian Electric Power Industry (HEP), a comprehensive transformation has started, which will provide from 260 to 320 million Euros net of financial income for the company in the next 5 years.

As it has been stated in HEP’s press release, with this project, the company will introduce new market operations, centralize the procurement, strengthen the sales and marketing, reduce the cost of “outsourcing”, as well as the number of organizational units. It is planned to create a stronger framework for planning the scheduled investments.

HEP transformation project has been jointly defined by the consulting company Price Waterhouse Coopers and HEP Management. The project includes all companies except for the Distribution System Operator Company of HEP (HEP ODS), Croatian Transmission System Operator (HOPS), HEP Gas Supply and HEP Telecommunications, thus encompssing 12 out of total 14 companies fully-owned by HEP. The next step is the restructuring of HEP ODS.

During the presentation of the second phase of the HEP transformation project, it was announced that together with the rejuvenation of the company,the necessary changes of organizational culture would be performed, leaving the primary technological form and assuming into the market-oriented form of organization. The Minister of Economy, Mr. Ivan Vrdoljak as well as the President of HEP Management, Mr. Perica Jukić attended the presentation.

“This is the proof that HEP has been developiing in right direction and that it will be even bigger support to the energy policy of the entire country and even more powerful promoter of the local economy in the years to come. HEP has initiated the cycle of hydro power plant rehabilitation and reconstruction which will last for about ten years. New projects for the power plants, worth more than 1 billion Euros have been also developing fast. Savings that HEP intends to make by this project are in the amount of the funds necessary for HPPs rehabilitation. That is the best guarantee for the investment realization- said Mr.Vrdoljak.

HEP reduces the complexity of the business, so in the first phase of the transformation project implementation it will include three companies fewer than before (Environmental Protection Services(APO), HEP Leisure and Recreation and HEP Training and Education Center, Velika).

Financial benefits in the production sector will be achieved by optimization of the production portfolio, reducing the number of management and administrative personnel, introducing a more solid framework for future maintenance and investment planning, more efficient procurement, reducing the cost of “outsourcing” , the synergy between production and heating and introducing some other measures. It is stated in HEP that a significant progress in savings have been made this year, especially in the procurement of energy fuels.

“Hrvatska elektroprivreda“ (HEP group) is a national power company engaged in electricity generation, transmission and distribution and in the past few decades it has been also engaged in the gas supply of the customers.

After the restructuring and activities separation,“Hrvatska elektroprivreda“ has been organized in the form of a concern, being the group of affiliated companies (subsidiaries).

Within the HEP Group, the companies (management, economic and legal) dealing with controlled activities (transmission and distribution) have been clearly separated from non-controlled activities (production and supply).

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