Ligatne Ltd Cyprus wants to become number three on the market for the distribution of natural gas

Reporter: What is the strategy of Ligatne Ltd for expansion on the Romanian natural gas distribution market, by acquiring Petrom Distribuţie Gaze?

Alexandru Bucşă: Since I became the general manager of Gaz Sud, in November 2011, I talked to the shareholders of the company, which also own GDR, about reinforcing our position on the market. Petrom Distribuţie Gaze was the most attractive distribution company for us, given its market share and the distribution of its clients across the country.

Our shareholders' target is to become number three after GDF Suez and E.ON, on the market for the distribution of natural gas in Romania. Presently, GDF Suez and E.ON currently hold about 90% of the market, and the remaining 10% is divided between the small operators. After this acquisition, Petrom Distribuţie Gaze, Gaz Sud and GDR will come to hold between 3 and 4% of the distribution market. The acquisition of Petrom Distribuţie Gaze was an important step towards reaching our goal to become number three.

I want to mention that the takeover of Petrom Distribuţie gaze will take place once we get the approval of the Competition Council. We will notify the Council about the deal as soon as possible. Essentially, the company will become part of our group starting in autumn, by October at the latest, we hope.

Reporter: Does Ligatne also seek other acquisitions on the market for the distribution of natural gas?

Alexandru Bucşă: From now on, we are still looking at 2-3 acquisitions to reach the market share goal we have set for ourselves, but price is very important, as is the timing of the sale of those companies.

The business with the distribution of natural gas is neither very easy, nor very hard. It is hard to make great profits when you are a small operator. But if you treat the business correctly, if you watch the costs, the efficiency and you give incentives to your employees, you can achieve a profitable business.

Reporter: Are you considering buying companies in a specific region?

Alexandru Bucşă: Not necessarily. Naturally, we are interested in companies that operate in the immediate vicinity of or areas of distribution, even if they cost more. Like I have already said, the price is also very important, and the experience of managers in our group gives us confidence that we can make this business to be profitable. Petrom Distribuţie Gaze will also be profitable in the near future.

Reporter: What will the consolidated financial results of the group look like this year?

Alexandru Bucşă: Gaz Sud and GDR are now showing an operational profit, and I am optimistic that on a consolidated level, we will end the year with a net profit. In the first half of this year, we have been profitable for the first time since 2009. The group is now lying on a healthy foundation.

Petrom Distribuţie Gaze will not post a profit this year, but I am convinced that 2014 will bring it an operating profit. I say that next year there are chances of Petrom Distribuţie Gaze no longer posting losses, or even posting a net profit.

We are not considering layoffs at Petrom Distribuţie Gaze. There are other costs that should be cut over there. The company has experts and very good specialists, whom we want to use at the level of the entire group.

In terms of turnover, Gaz Sud and GDR will cumulate, in 2013, about 15 million Euros. The integration of Petrom Distribuţie Gaze into the group will double this figure.

Reporter: How do you currently ensure the volumes of gas needed for your customers?

Alexandru Bucşă: We have a contract with international trader Axpo Energy. The relationship is very good, as the trader is very flexible.

Reporter: Are you still participating the calls for tenders organized by the Ministry of the Economy for the lease of the gas grids?

Alexandru Bucşă: We do when we are interested. For now, we are not considering anything.

Reporter: What are the issues you are faced with in the distribution of natural gas?

Alexandru Bucşă: Last year, we have invested about two million Euros in the Moeciu grid. We are losing money over there because we have about 50 customers connected to the grid. In order to be profitable, we will need to get about 300-400 customers. The people over there have other priorities, they use firewood for heating. It will be hard, but we are not giving up. The best grids for the distribution of natural gas is in the cities of Bucharest. They have a potential for growth and they have volume.

I have to tell you that over the last two years, consumption of natural gas has fallen noticeably. First of all, we are dealing with the people's purchasing power, the crisis which affects the companies, as well as the concern with increasing the efficiency of consumption. Gas has become more expensive, liberalization has begun, and consumers are concerned with lowering their bills. Many are beginning to switch to solar panels. The drop in the consumption of natural gas is not good for the business of consumers, but it is a challenge that we will have to deal with.

Reporter: And yet, you continue to make acquisitions in the field, despite the difficulties.

Alexandru Bucşă: If one knows how to manage and lead this type of business, then you can seize the opportunities. This is what we are doing now. We are still consolidating, we want to reach next year the market share we have set as a goal for ourselves.

Reporter: What is the development strategy of PPF in Romania, over the coming years?

Alexandru Bucşă: The discussion isn't necessarily limited to the distribution of natural gas. We are also looking at other energy businesses. PPF is considering everything, from renewable energy, to refineries and gas stations, in Romania, as well as in the region. For now, nothing has materialized in Romania.

Reporter: Thank you!