TBY talks to José María Moreno Fierros, Managing Director of Hermogas, on its competitive advantages, the consequences of energy reform, and protecting the environment.

 José María Moreno Fierros
José María Moreno Fierros holds a master’s degree in economics and finance from La Salle University and a format in senior management from IPADE. He has over 20 years of experience in the LPG industry. He was formerly President of the Mexican Association of LPG Distributors (AMexGas) and is currently Partner and Managing Director of Hermogas.

What niche did you identify in the gas industry that you could serve?

I was interested in LPG because Mexico has the largest residential consumption in the world; 80% of Mexican households use this gas. There is strong competition in the country and about 1,000 plants in Mexico. Hermogas applies new technologies for its customers. We are launching a mobile app through which our customers can request gas; this app is based on IoT technology and will show in real time the level of gas that customers have in their homes. When there is insufficient gas, customers will receive an alert to order a refill or our company will send it automatically. In addition, this app and sensor technology will detect gas leaks and activate a safety protocol. We go beyond traditional marketing and are making inroads in social media. There are nine gas companies in Sonora, and we have around a 30% market share.

How do your competitors react to your innovative initiatives?

We have seen other companies replicating our initiatives; however, we are at a higher level of innovation because we never stop developing technologies and improving our customer service. In this industry, it has been difficult to be different because, for a long time, Pemex was the only supplier; we had fixed prices up until December 2015. Thus, when other competitors offer a product at a similar price, we have to differentiate our company by the quality of service. We always seek this differentiator; that is why we are in a constant process of innovation.

How has the energy reform transformed your business?

The reform rapidly benefited the LPG industry, particularly in the northern states, because we could make inroads in the imports of gas as a result of our proximity to the US. In January 2016, we could import gas for the first time. Pemex will remain a supplier, and it is important to always have a national option without it being a monopoly. On top of this, the free flow of prices has benefited us; we can tell what is the proportion of the cost of molecules, logistics, and storage in the overall prices. This has helped us to increase the quality of our trucks, storage tanks, and service, ensuring safety for our customers. This also allows us have freedom in prices, helping us provide clients with quality of product and service.

Are you concerned that safety and service have been disregarded with the liberalization of prices?

There will always be a segment of customers interested in lower prices. We have state-of-the-art measurement technology, certifications, and training; these have an impact on our prices. However, a larger segment values companies that are responsible and professional and that offer a safe service. LPG gas is a hazardous material, and it always has to go together with a safe service in compliance with regulations.

How do you integrate the protection of the environment in your operations?

We are in the distribution segment and do not participate in extraction and exploitation; therefore, we are working in the cleanest part of the business. We handle small amounts of hazardous waste in compliance with regulations and are certified by PROFEPA. Also, there is a new trend of using LPG for vehicles instead of gasoline, so we will contribute with changing motors to function with this fuel. There are 30-40% savings to be made by using LPG instead of gasoline.

What are your future plans and goals for the following years?

We plan to continue growing in the vehicle carburation business; we have 25 carburation stations and plan to open 10 more stations this year in the areas where we are present. We aim to grow in this segment because of the transition of fuel for vehicles due to the liberalization of prices. For the moment, we would like to consolidate our presence in our current cities.