ENECO - power IN THE MARKET WHAT'S NewS Issue 4 April 1996 working relations 3 One of the largest energy Utilities in the Netherlands, ENECO is in the process of changing from a public electricity supplier to broad-based corporate engaged in telecommunications, cable television and the environmental sector.This transition requires major changes in how ENECO approaches its clients. CFO Wim Bovy explains the repositioning in a new market environment, and what f o banks should be doing to assist ENECO's growing business. Created in 1995 following the merger of a number oflocal energy utility companies, ENECO currently serves 1 million clients in a region which includes the Port of Rotterdam. Wim Bovy Over the past few years, ongoing deregulation in energy supply has opened up the sector to market forces. In response, ENECO has not only reevaluated its approach to the market, hut has also expanded its activities into a number of other, related areas. 'We began with cable television,' says Bovy, 'and we're now moving into telecommunications. From 1 January 1998, existing monopolies in voice telephony will be history in the Netherlands. Telecom will be a highly competitive sector, with domestic and international players vying for market share. We intend to be a player in that market.' CHANGING MIND-SET Deregulation is a process ENECO knows all about. 'We've seen the emergence of market forces in our core business and we have had to come up with an effective response,' Bovy confirms. 'Customers today, especially the large corporates, are clearly taking advantage of the growing competition in this market. If they don't get the right price from us, they'11 go elsewhere. Obviously, our purchasing price for energy is not the same as our sales rates. Corporates understand that very well indeed and try to get the best •jossible deal from us.' -or former monopolies, this is, of course, a very new way of doing business. 'On the one hand', Bovy explains, 'you have to rethink your purchasing strategy. Where buying supplies was once almost automatic, you now have to start trading in energy. The other side is marketing. We have had to introducé other work processes and practices, to focus on what the cliënt wants from us, and how we can provide it proactively.' ENVIRONMENTAL RESPONSE The move into the environmental sector was a logical progression from the new approach. 'When you start looking at cost-effective ways to generate power, then waste processing is one option. Recycling is a response to that climate. Actually, we're in a rather ambiguous situation here in the Netherlands. On the one hand, we are expected to do everything we can to reduce the use of energy - in the home, in industry, while as a company we also have to grow our business.' One result of this ambiguity is a consultancy role for ENECO. 'We advise and develop ways for clients to conserve energy,' he says. 'This may not sound like particularly good business practice as what you're doing is showing customers how to use less of your product. But in the end, it has a positive effect because it is a ENECO - CREATIEVE BANKIER GEZOCHT Eneco, een van de grootste energiebe drijven, begeeft zich door veranderende marktomstandigheden nu ook op de kabel- tv, telecommunicatie- en milieumarkt. Door de toenemende concurrentie is men nu klantgericht in plaats van produktgericht bezig. Van haar bank verwacht zij eenzelfde opstelling.Voor banken die een krediet faciliteit willen aanbieden, heeft men geen tijd. De bank die hulp kan bieden bij het bereiken van de bedrijfsdoelen in de vorm van projectfinanciering en andere financieringsprodukten is van harte welkom. way to promote cliënt loyalty and so increase market share.' CREATIVE SUGGESTIONS One approach which meets both requirements is the construction of cogeneration plants - facilities which not only produce plain vanilla power, but also have other, often environmentally-friendly, applications. 'A major investment,' says Bovy, 'and this is, of course, where banks come in. Most of our normal finance requirements are met by private placements. We go to banks primarily for project finance. I don't think we're a particularly easy cliënt for banks because we do not have obvious, clear-cut product requirements. So, for us, a banker has to come up with creative suggestions tailored to our particular situation. That means they have to know who we are and what our aims and goals are - both now and in the medium and long term. They have to show interest and that they are thinking about what we're doing.' ADDING VALUE However, Bovy also agrees that is not an easy exercise. There is a fine line between showing interest and showing up regularly without anything to put on the table. 'Although I understand you can't build a relationship without meeting up once in a while, quite frankly I have better things to do with my time than sit chatting with bankers who have nothing tangible to offer me, except perhaps credit. I.et me put it this way, we want to work with bankers who are adding value for us by coming up with ways to assist us in achieving our goals. We want to meet with them when they have something constructive to say or a solution that fits our requirements. At ENECO we are changing our mind-set so that we work from a cliënt perspective. I would like to see more of the same attitude from bankers.'

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