Gazprom to Sell its Stake in Lithuanian Utilities Lietuvos Dujos and Amber Grid
The Lithuanian government has reported that Russian gas company Gazprom—the largest natural gas extractor in the world—plans to sell its stake in Lithuanian utilities Lietuvos Dujos and Amber Grid for 417 million litas ($164 million).
Gazprom provides all of Lithuania’s natural gas along a pipeline from Russia and currently owns 37.1 percent of the two utility companies.
Lithuanian Prime Minister Algirdas Butkevicius said that the move will not impact gas prices, at least not through 2015, which is when the current contract for gas purchases is due to expire. Future prices will “depend on further talks with Gazprom.”
Gazprom was founded in 1989 when the Soviet Ministry of Gas Industry became a corporation, securing a monopoly in the gas sector and retaining all of its assets. The organization became a joint-stock company in 1993, when the government employed a voucher method for the public to purchase shares. The Russian government remains majority shareholder with 50.01 percent of the company.
Lietuvos Dujos was established in 1961 and deals in the imports, distribution, transmission and sales of natural gas. Its market share is 45 percent. Amber Grid, founded in 2013, is the operator of Lithuania’s natural gas transmission system. The company serves power plants, district-heating plants, industrial companies and gas supply companies. Amber Grid is also the Associated Partner of ENTSOG (the European Network of Transmission System Operators for Gas).
A liquefied natural gas floating storage and regasification unit terminal is currently under construction in Lithuania. A floating storage and regasification unit (FSRU) has been built and will reach the new terminal by December. Upon its completion, Lithuania will be the fifth country in the world to use FSRU technology for liquefied natural gas. The FSRU is expected to reduce the dependence on Russian energy in Lithuania, Estonia and Latvia.
Gazprom's board recently met in Moscow to decide whether to agree to proposals from Lithuanian state-owned firms EPSO-G and Lietuvos Energija to buy the stakes. The sale is in compliance with European Union gas market rules on fair competition, which specify that energy suppliers cannot dominate ownership of the infrastructure.
Former Lithuanian energy minister Arvydas Sekmokas weighed in on the sale, saying, “This is good news. The sale means that Lithuania and Gazprom will start conducting their business on a commercial basis, and this will eventually improve relations between Lithuania and Russia.
Technology revolution for water retailers
In April 2017, the UK’s water retail market in the world opened for business – the single biggest change to the water sector since privatisation. This development allowed businesses, charities and public sector organisations to shop around for the best deal.
However, like any industry, this change hasn’t been without its sticking points; here, Paul Williams, CTO at Everflow Tech (pictured far right), discusses how retailers can harness technology to their advantage
Quotations could take up to a week to produce, billing software had to be manually updated and brokers were unable to manage the complete customer journey in one place – all of which took time, cost money and allowed for human error.
The more complexity that was involved in billing or quoting, the more contact end customers needed to have with their retailers, pushing up the cost to serve for every SPID. This meant retailers – ourselves included – found themselves in a situation where profits were simply eaten up by service costs.
We also note that it can traditionally be hard for retailers to stay on top of balancing what they are charging their customers with what they are being charged by the market. To further exacerbate this, the longer a change goes unnoticed, the more trouble it can be to balance the issue.
It was these issues that Josh and his (at the time) small team wanted to ameliorate, creating their own technology in the absence of anything else.
This technology evolved into our award-winning retail sales, billing and customer management platform for the water retail market, and Everflow Tech was launched as a standalone venture in 2018, selling the software externally for other water retailers and their customers to benefit from.
What retailers want
As a relatively new entrant to the world of utilities competition, the water market could be seen to be lagging behind, particularly when it comes to innovation.
In fact, as recently as 2019, Ofwat said it expected the industry to be making technological advances and to be working with a culture of innovation, collaborating with companies both within and outside of the sector.
And with cost-savings for consumers traditionally lower than for other utilities, retailers need to be offering something more – whether that’s better support, energy-efficiency advice or more accurate data.
What’s more, consumers have had a taste of the power of technology, and they’ve come to expect nothing less from retailers across the board.
Another key issue – thrown into sharp relief during the past 12 months (and counting) of a pandemic – is rising levels of arrears, which are likely to increase bad debt beyond margins that retailers originally allowed for when the market was created.
In such a low-margin industry, there is a limit to the amount of debt retailers can take on, especially as recovering costs can be a very slow process. Ofwat has signalled that this issue could be addressed as early as this year, with a mechanism for recovering bad debt to be established during 2021/22.
The market needs simple solutions to better serve the end user, and we were perfectly placed to develop those solutions. At Everflow, our software is designed for the water retail market, by the water retail market.
As well as simple billing, clear-to-understand workflows, and a revenue assurance system to allow retailers to quickly compare market charges, Everflow has also introduced a complete debt solution, allowing missed payment dates to drive late payment charges and escalations automatically.
Retailers are able to design and put out their own bill and quotes, tailoring customer journey and overall experience – whatever the circumstances.
What does the future hold?
Automation is key to any industry; we’re heading into an age of driverless cars and smart homes, and this drive for tech will filter through to our industry, and we need to catch up.
The Internet of Things – a network of physical objects connected to each other – means human error (and effort) can effectively be removed from many everyday tasks, which goes for meter readings too. However, in the 21st century, the water market is still not leveraging previously emerged technology in the form of smart meters to provide accurate billing.
Consumers are also becoming more empowered, both to ask for information and change their preferences if they don’t like what they learn. Retailers need to be armed with this information, not next week, not tomorrow, but now – and, at Everflow Tech, we’re putting that information at their fingertips.
But the retailers themselves need to speak up too, and we will always work with them to get the best ideas on what needs to be developed and when.
Our strong bond with Everflow Water, along with other key customers, means we have a direct interest in making sure our systems serve the water market in the best way they can.
For us, the goal is to make sure retailers on our platform can grow as much as possible, leaving behind laborious daily processes to focus on their own strategic growth and, most importantly, helping their customers.