RWE is an integrated business, with annual revenue of EUR54 billion, operating both in energy, crude oil and natural gas production and on the sale and distribution segments. The German group entered the Romanian market several years ago and mainly got involved in energy wholesale, but also in supply operations through a Hungarian subsidiary, MASZ.
However, the subsidiary does not have extensive activities and the group’s management decided for energy retail operations to be carried out directly under RWE brand from now on. RWE Energie company last week got the energy supply license and still has several bureaucratic stages to go through until it starts selling electricity.
“The companies will operate in parallel for some time. Some clients will gradually shift to RWE Energie. The German group wants MASZ to gradually cease operations,” said Gabriel Horneac, currently a sales manager with MASZ. He will run the supply operations at the new company.
“Our medium and long-term plans are to become a major league player, namely to be among the largest suppliers of electricity. That should happen in around five years,” he added.
MASZ sold around 100 GWh of energy in 2013, meaning RWE starts from a share of less than 0.4% of the market. To gain a top position among energy suppliers, where revenue revolves around hundreds of million euros, the German company needs to considerably widen its client portfolio and boost sold volumes and this should happen on a fragmented and highly competitive market.
While in late 2012, 35 companies vied on the energy retail market, their number had climbed to 48 in December 2013, according to the Romanian energy watchdog ANRE.
“Competition is tough, but this is no news for us, considering the experience the group has through MASZ, which has operated for three years on the market. It is clear the Romanian market will also undergo crystallization, that things have changed and the market is maturing. The market is still ambiguous, but I am confident that finally, considering margins are very low in this business, the major players will be those that will survive on the long term,” added Gabriel Horneac.
The German group’s management stated in the annual report that the German or British markets have hit their growth ceilings, and Central and Eastern Europe would offer expansion opportunities for energy supply businesses. RWE in 2013 entered Croatia by acquiring a local supplier and now has 28,000 consumers on that market. The same year the group also made its first inroads on the Turkish market.
According to Horneac, RWE also plans to get involved in natural gas supply operations in Romania. At European level, the group is a major natural gas supplier and importer.
(English version by Catalina Apostoiu)