New investments improve regional central heating

04/02/2013

Citizens in Macedonia are turning to private companies for heat, leaving the monopoly companies to face competition.

By Aleksandar Pavlevski for Southeast European Times in Skopje -- 04/02/01

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Lower temperatures and rising prices have prompted many to look for alternative heating companies. [AFP]

Monopolies held by heating utility companies in the region have resulted in higher prices, poor service and frustration for customers, but recent private company investments are improving services.

Prices for central heating in Macedonia dropped between 5 and 11 percent after the Balkan Energy Group, a Macedonian company operated with foreign capital, jointed the Toplifikacija utility in offering services.

"Toplifikacija did not offer a good service. The radiators were frequently cold, even though prices rose every three months. Consequently, in my apartment building 20 percent of the inhabitants voluntarily cut [themselves] off from the central heating system," Snezana Stanoevska, resident of the Skopje municipality of Karposh, told SETimes.

Because of frequent price increases and worsening service in the past two years, nearly 20,000 Skopje residents disengaged their radiators from central heating. But Toplifikacija continued issuing bills to citizens who disengaged from the central heating because, the company said, they still are being heated from the surrounding apartments and the pipes that go through them.

"There is no sense in paying for a service I do not receive. By law, nobody can oblige me to pay for something I do not use and for which I have no contract," Rade Stojkovski, a resident of Skopje, told SETimes.

The customers have initiated negotiations through citizens association groups with Toplifikacija and the regulatory commission to stop the practice.

Balkan Energy group said it plans to expand its holdings in the country.

"BEG intends to invest in building hydro-electric power plants in Chebren and Galishte, and [will continue] with other energy production projects in Skopje to improve services to citizens and energy efficiency and performance," the company told SETimes in a statement.

Analysts said the private company investments are expected to stabilise the market created by monopoly inefficiency.

"[Since the] current monopolies [do not have the] have fitness and capital to compete better then the people, they fail and powerful investors will take over the business," Shenaj Hadzhimustafa, a professor of economics at the University of Tetovo, told SETimes.

Toplifikacija said last year that it cannot operate the country's heating system by itself because the prices approved by the state regulatory commission are not sufficient to cover daily work.

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Citizens in other regional countries are also upset with the monopolies.

Serbia's constant rise in prices of central heating, up 20 to 40 percent in 2012, has caused citizens to grumble.

"The central heating system every year is worse. Our apartments are cold. A few years at this rate, and heating plants will bankrupt people," Stephen Stoilkovikj, a resident of Belgrade, told SETimes.

"The expensive crude oil and natural gas whose prices have continually increased, created big problems for the heating utilities in Croatia and Serbia. For now, a domestic or foreign strategic partner has not appeared to help improve services, but it is expected more private capital will increasingly tackle problems where monopolies fail," Hadzimustafa said.

This content was commissioned for SETimes.com.
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