Romgaz, still 70% owned by the Romanian-government, wants to take one more step towards corporate management, after having recruited a private sector executive as its general manager and replaced the members of the board of directors with people nominated by various shareholders.
In January the company announced it wanted to implement a variable payment scheme for its middle management that will factor in performance targets. The natural gas producer is the second largest company by market capitalization on the Bucharest Stock Exchange, RON13.6 billion.
Romgaz has reached RON4.5 billion revenue and is currently employing more than 6,000 people. It has natural gas exploration, production, supply, distribution and storage operations and two years ago expanded into electricity generation after buying a thermoelectric power plant. The company runs its business via a high number of branches, divisions, departments and offices, with many work processes that will have to be reviewed and redesigned.
The transformation will not fall upon the general manager or the board but will be outsourced to a consultant, to which Romgaz will pay RON5 million, according to an ad in the Electronic System for Public Procurement (SEAP). The consultant selected will have 12 months to design a new organizational strategy and then seven months to assist the company in implementing it.
The consultant will be allowed to look at the management models of similar national and international companies for inspiration, even when defining the governance model suitable for Romgaz, according to the conditions of contract. It is suggested that Romgaz might drop the management system where the executives are subordinated to the Board of Directors, going for a system where the Supervisory Board monitors the board.
The latter, inspired by German companies and used in Romania by OMV Petrom (SNP.RO) and Transelectrica (TEL.RO), among others, requires a board of non-executive members only. In most Romanian companies, Romgaz included, the general manager is also a member of the Board of Directors and even its chairman in some cases.
“The reorganization of Romgaz is because of the need of the company to consolidate and develop its position of most important natural gas producer in Romania and become a leading actor on the major markets in Central and Eastern Europe,” Romgaz officials said.
The company seeks to adjust its organizational structure to the business environment ‘in order to meet strategic goals’ and comply with legal requirements, such as the obligation to separate gas storage from production and supply operations, they added.
(English version by Loredana Fratila-Cristescu)