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Broken Slovnaft monopoly paves way for foreign gas stations

Gates were opened for foreign companies looking to invest in Slovakia's gas station market when the Anti-Monopoly Office ruled in May 1995 that Slovnaft, which purchased a 51 percent share of Benzinol earlier that year seizing 80 percent of the market in 1995, could only have a 50 percent share by the end of 2000.
As a result new gas stations have been springing up but Slovnaft still dominates construction and operation of gas stations in the country. At the end of 1996 there were 480 gas stations in Slovakia. Slovnaft owned 105 of them with another 204 chipped in by Benzinol. This total, 309 gas stations, makes up 64 percent of the market.
Responding to the ruling by the Anti-Monopoly Office, Slovnaft is looking abroad for new markets. "Slovnaft will look and will build new gas stations in surrounding countries, so it can export fuel to them," said Ľubomír Žitňan Slovnaft's spokesman. Slovnaft already has 19 gas stations in the Czech Republic and 2 in Ukraine.

Gates were opened for foreign companies looking to invest in Slovakia's gas station market when the Anti-Monopoly Office ruled in May 1995 that Slovnaft, which purchased a 51 percent share of Benzinol earlier that year seizing 80 percent of the market in 1995, could only have a 50 percent share by the end of 2000.

As a result new gas stations have been springing up but Slovnaft still dominates construction and operation of gas stations in the country. At the end of 1996 there were 480 gas stations in Slovakia. Slovnaft owned 105 of them with another 204 chipped in by Benzinol. This total, 309 gas stations, makes up 64 percent of the market.

Responding to the ruling by the Anti-Monopoly Office, Slovnaft is looking abroad for new markets. "Slovnaft will look and will build new gas stations in surrounding countries, so it can export fuel to them," said Ľubomír Žitňan Slovnaft's spokesman. Slovnaft already has 19 gas stations in the Czech Republic and 2 in Ukraine.

Compared to Slovnaft's limited plans to built gas stations in Slovakia, other companies plan to build more and more as opportunities exist. ÖMV already has 24 gas stations around the country. By the end of 1997 they plan to build 20 more stations. According to an ÖMV representative, Slovnaft and Benzinol are not their prime competition. The representative cited the fact of Slovnaft and Benzinol's major share and advantages as a domestic company. Instead ÖMV sees their true competition as smaller firms, such as Shell. By the year 2000, ÖMV plans to have 60 gas stations around the country.

Avanti, an Austrian company, is represented in Slovakia by Acord. "Avanti has 19 gas stations already, and by the end of the year is planning to increase that number to 25, " said Marta Lengyelová, marketing manager for Avanti. It is the only chain that imports gas and naphtha from abroad (Austria and Hungary).

Shell, the Dutch-English company so far has 16 gas stations. Its plans are to have 22 or 23 gas stations by the end of the year, and to gain a greater share on the market. A Shell representative said that most of their gas stations are already situated in western Slovakia where more highways are built.

There are also smaller chains like ESSO which has three gas stations, and ARAL with one gas station. These companies are just getting started though.

ARAL plans to have 15 gas stations built by the year 2000, according to Juraj Lettrich, the director; and ESSO three more by the end of 1997, aiming to have about 13 by 2000. Other companies are starting to build new gas stations as well. BP Slovakia, the British company is a good example. BP is in the process of building one gas station, and has future plans which they would not disclose.

Most companies decide to build their own gas stations since high standards are best managed from the start. It costs Slovnaft 30 million Sk ($1 million) to build from scratch. ÖMV said it takes approximately 35 million Sk ($1.1 million). ESSO however spends about 60 million Sk ($2 million), investing in environmental precautions that are required.

Žitňan said that a market study for the year 2000 predicts that there will probably be 600 gas stations in Slovakia. Since this is the case, Slovnaft has no current plans to build in Slovakia in the next few years.

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