DRAVA, KUPA, RJE»INA, LOKVARKA, LI»ANKA LIKA, DOBRA ...

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HEP ANNUAL REPORT 2010
CHAPTER 7 - REPORTS BY HEP GROUP COMPANIES WITH FINANCIAL STATEMENTS
HEP-TOPLINARSTVO d.o.o.
ROBERT KRKLEC
DIRECTOR
IN 2010, HEP Toplinarstvo d.o.o. (HEP Heating) successfully carried out its activities of production, distribution and
supply of heat energy as well as development and construction of the heating network in Zagreb, Osijek, Sisak,
Velika Goprica, Samobor and Zaprešić. Despite harder business conditions, caused by the economic crisis as well as
by inadequate heat selling prices, the company provided quality and reliable deliveries of heat energy and process
steam for 116,534 household and 5,950 economic entities.
As part of the Investment Plan, HEP Toplinarstvo continued the implementation of the existing investment
projects and started new ones. Especially worth mentioning is the completion of the Hot Water Network Refurbishment
Project in Zagreb and Osijek, financed by a World Bank loan and partly by our own funds. As part of this capital
project, implemented from 2006 to 2010, 20 km of hot water network in Zagreb and 7.2 km of hot water network
in Osijek were refurbished and 2.6 km of new hot water pipelines in Osijek were built. The refurbishment of the
hot water network has been the largest work of its type ever since the network was originally constructed. The
refurbished network increases the safety of the heating system, reduces distribution losses of heat energy as well
as makeup service water, whereby large financial savings are achieved, number of emergency repair decreases,
new technologies are adopted, armature handling is facilitated and its life is extended, network monitoring system
is improved, and indirectly a positive environmental impact is achieved.
In 2010, the construction was completed of new power facilities as part of the project of construction, operation
and maintenance of the energy plant for Zagreb University Hospital at Rebro Hospital location. The project
encompasses a complete supply to the hospital of all energy forms – heat energy, cooling energy, process steam
and electricity.
In addition to the above projects, the implementation of energy efficiency projects began in cooperation with
HEP ESCO – the project to introduce gas to boiler G3 (the largest boiler plant in Velika Gorica, 20 MWt) and to build a
connecting hot water pipeline between boiler plants G3 and G1, as well as the project of technological and economic
optimization of the district heating system in Zagreb (TERMIS) system). The main objectives of these projects are more
economical business operations, environmental protection and development of new technological solutions for the
application of energy efficiency measures, in accordance with the strategic interests of the national energy policy.
In spite of the utmost efforts of the Company, in 2010 again the biggest problem of our operations and development
of the heating business was not solved – unrealistic ratio of prices of fuels needed to produce heat energy
in cogenerating plants and separate boiler plants to selling prices of heat energy. The continuous growth of input
costs has not been followed by appropriate change in selling prices and/or revenues from heat energy supplied,
which is crucial for normal operations and development of the business.
It must be also mentioned that the amendments to the Energy Act of October 2010 transfer decision making
concerning change of amount of tariff items in the Tariff System for energy activities of heat energy production,
distribution and supply to the level of representative bodies of local self government, which is very unfavorable for
the heating activity. HEP Toplinarstvo experts have participated from the very beginning in legislative procedures vital
for the reform of the energy sector in the area of heating, and we intend to continue to do so in the future.
Finally, I believe that HEP Toplinarstvo through the organized, professional and dedicated work of its experts
will successfully carry out the planned investment projects, new connections, maintenance work, make heating
system improvement and meet the requirements facing the heating activity upon the coming into force of the new
legislation as well as all other challenges that lie ahead in 2010, in spite of aggravated business conditions.