| Rompetrol Georgia: 100% EU Origin |
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21/04/2009 14:50 (213 Day 18:15 minutes ago) | |||||
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The FINANCIAL -- The FINANCIAL interviewed Dan Voiku to find out how receptive the market was to the previous changes and how the company addresses current issues in oil importation. Mr. Voiku speaks about the quality of oil products offered to Georgian customers and on the innovations they are presenting.
“2008 was very successful for our company,” says Dan Voiku, General Director of Rompetrol Georgia, one of the leading oil importers in the country. The company that reached USD 100,000,000 of revenue in 2008 says it has an even more optimistic forecast for 2009.
The FINANCIAL interviewed Dan Voiku to find out how receptive the market was to the previous changes and how the company addresses current issues in oil importation. Mr. Voiku speaks about the quality of oil products offered to Georgian customers and on the innovations they are presenting.
Self-service gas stations are widespread in the USA and Europe, but not in Georgia. Some think it’s an issue of mentality, others think it’s just a matter of time. Mr. Voiku thinks that in 2 or 3 years time such gas stations will appear in Georgia too. He says that buying habits will gradually change and companies should support this change.
“It’s a matter of customer habits in Georgia. Today the Georgian consumer is used to being served at the pump by an operator. I suppose that by increasing the mix of services that are available at our gas stations we can open the habits of Georgian consumers to different alternatives. The entire market has to go in this direction. It’s a matter of time and gradually the habit of not leaving the car at the pump will change. Most probably in 2 or 3 years we’ll be able to notice such changes.”
Q. Are you planning to build such a station to test whether or not the practise will work well?
A. In terms of technology I wouldn’t say it’s a problem to implement such a network here. It’s especially not a challenge for Rompetrol as we keep the stations in accordance with our EU retail standards. Thus no additional investments would be needed, the gas stations would just work without operators.
The pumps that we use at our gas stations cost round GEL 30,000 on average. At each station we have two to three pumps. In terms of technology we have specialized software system from Israel. This system costs from GEL 60,000 to GEL 80,000 per station. Today Rompetrol Georgia is also trying to build a network of convenience stores, which is new for the market. I assume that consumers will slowly get used to a new network of shops at our stations.
Q. Recently Rompetrol Georgia introduced Efix products to the Georgian oil market. What are the advantages of using Efix and what are your sales forecasts of Efix?
A. Starting from the date when Rompetrol Georgia converted operations to the retail segment, we have a commitment to periodically bringing in new products and services. Efix is a big step forward for the Georgian consumer market. So this is part of our strategy to bring the Georgian consumer as close as possible to EU standards and buyer habits.
It’s a well implemented type of fuel in the EU, which is launched from our base in Romania and is regarded as fuel responding to the needs of modern drivers and consumers. The octane rating of Efix Euro Premium is 96. We use upgraded euro 4 fuels on the market as Efix is a mix between EU fuel and some special additives that we import from Germany and France.
Efix is a state of the art type of fuel for the Georgian market. The “engine life” as we call is extended. Efix is extremely positive in respect to important technical measurements such as injectors, valves and fuel consumption.
The price of Efix is in the reasonable range. Today the price of Efix Euro Premium is GEL 1.20 and for Efix Euro Diesel - GEL 1.26. These prices are well adapted to the market needs and are adequate to the overall level of local prices.
Q. There’s a kind of stereotype that “European oil products” offered by different oil importers in Georgia are produced in Azerbaijan. Do you think that the term “European” is sometimes used for marketing purposes and does not actually indicate the real origin of its production?
A. Whatever fuel we distribute in Georgia, we import it from our refinery in Constance on the black sea coast. When Rompetrol calls its product euro regular it’s from its EU source. In respect to our competitor’s approaches I think it would be better for them to justify their decisions and how they position themselves on the market. Of course we are fully aware of whatever they’re doing, but it would be unethical for me to discuss their operations.
It’s a fact that Azerbaijan is a strategic supplier for Georgia. So indeed there is a strong market share coming from Azerbaijan. In respect to the euro label, in our understanding when we call our products euro it means they are produced in the EU, which in our case is 100% accurate. So I leave the final choice to the customer, whether he/she buys products from the EU or Azerbaijan.
Q. Who is responsible for controlling the quality standards of imported oil products in Georgia? How can customers control the quality of the products they buy?
A. Rompetrol has its set of tests when it imports fuel. We are in a bit of a better position than our competitors I would say because we have a well integrated supply chain. We have tests at the refinery gate and when we load the vessels in Constance we have full quality control. Then we discharge fuel in our Batumi facility. So we keep track of every quality parameter in our supply chain because of a commitment to our customers. Every consumer has the right to request specific test results and certificates of origin. It’s hard to speak for the others, but in our case we take full responsibility for our product quality.
Q. How would you assess the results achieved by Rompetrol in 2008?
A. In 2008, we had a good opportunity to prove our commitment in the development of the Georgian oil product market. The unpleasant event of August’s war put a lot of pressure on everybody, but Rompetrol tried to keep its pace up even during the most intense moments. Throughout the August invasion we were the only western importer that continued importing to Georgia. This has proved our dedication to continue developing in the country.
Moreover Rompetrol tried to keep all of its stations open. The Zugdidi gas station was stopped for half a day and Gori station for a few days due to evacuation by the army. Nevertheless we tried to keep our network at maximum availability for our customers.
Q. Did you push back your plans for expansion because of the financial crisis?
A. The financial crisis has had very little influence on our operations because Georgian consumers were very responsive to our offer and retail programmes. Our sales have continuously increased and have not reached the point where we would feel pressure from the crisis.
We survived thanks to our continuous efforts to improve our packages of products offered both from quality and price points of view. I think that ability to provide the right mix for every segment was beneficial for us.
Q. How many stations are you going to add in 2009?
A. In 2008 we managed to keep the pace of development at maximum level. At the end of 2009 we are going to increase the number of our gas stations to 45. It will strengthen our position on the retail segment. We are going to increase the number of our gas stations to 45. Currently our presence in the regions is strong and competitive in regard to the offering. Out of the new stations 6 to 8 will be added in the regions.
Q. What was the annual asset turnover in 2008?
Today we have more than GEL 20,000,000 assets in our network and in terms of taxes paid to the budget this is obviously directly related to the rate of sales. In 2008 we had an increase in sales and we paid taxes of more than GEL 40,000,000 to the state budget.
Q. What changes are you going to make in the promotion of your products and brand image in 2009?
A. I think our message is well perceived on the local market. We have very good feedback from the consumer perspective and growing sales figures are a good indicator of this. Thus I think our offer is the most dynamic. Definitely the consumer feels this and is highly responsive.
In addition to this Rompetrol has proven its quality-quantity delivery confidence in customers. The message that one litre is really one litre at Rompetrol gas stations worked well. So generally speaking our message is well defined and distributed to final consumers.
Q. How many employees does Rompetrol have today?
A. Today we have around 450 employees working at Rompetrol Georgia. 50 of them are working at our headquarters. Usually they are young people ready to put effort into the growth of the company. These hardworking people know how to do their job to help the company reach its objectives. And by the end of 2009 we will have 700 employees because of the new gas stations that we are going to open.
Q. What was the amount of investments made by your company in 2008?
A. In 2008 we invested around GEL 12,000,000. We think that this investment has proven to be very well oriented and the results are already visible.
Q. On July 11, 2008, oil prices rose to a new record of USD 147.27 per barrel, then there was a sharp fall and today it’s USD 53. Despite the fact that oil prices decreased 3 fold, oil prices in Georgia decreased only two fold. Why didn’t oil importers lower the price adequately to equal world prices?
A. First of all it should be clear that there’s no direct proportional connection between the crude oil cost and the final refined products distributed on the markets. Obviously the prices are linked but not directly. There are two key components to be considered one is the tax component and second is the exchange rate. Due to changes in the currency exchange rate of USD/GEL there were changes in prices. I would claim that the price reduction which we observed over the last months on oil products in Georgia was quite realistic and adequate. Moreover the local market has responded very well. Even in the EU the prices haven’t decreased so dramatically like what occurred here.
As for the recent price changes, I can say that they were justified because the refined products became more expensive. For instance 1 tonne of gasoline used to cost below USD 400 on international markets and now it’s around USD 500. But the overall picture is pretty normal and the competitive environment is working well in Georgia.
Q. What kinds of investments are made by Rompetrol Georgia in CSR activities?
A. Currently we are working on social programmes for the quality of traffic rule implementation and safety of children on public roads. We intend to implement this programme most likely with the state body entity. The goal is to deliver the message of the importance of safety on public roads. We will try to promote it with High Schools and district police departments.
In addition to this, starting from August Rompetrol Georgia has been very active in helping IDPs. We have made several donations to this cause.
Written By Levan Lomtadze
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