Universidad San Andrés Argentina
This case focuses on Gas Natural BAN’s network expansion project to provide natural gas services to five low-income neighborhoods in Buenos Aires City’s suburban area. It shows how a business model evolved to serve low-income sector (LIS) customers, and, more particularly, it describes how the company partnered with a local CSO, the Foundation for Social Housing (FPVS, for its Spanish acronym), and learned how to work with these communities. Gas Natural BAN was a subsidiary of Grupo Gas Natural SDG S.A., a multinational energy utility that supplied, distributed and marketed natural gas in Spain, Latin America and Italy, with an overall customer base of 10 million. In late 2007, Gas Natural Group was Latin America’s leading natural gas distributor.
This multinational group had operated in Argentina ever since the government-owned utility, Gas del Estado, had been privatized. On December 28, 1992, Gas Natural BAN was awarded a license to provide natural gas distribution services in the northern area of the Buenos Aires Province for a 35-year period. Until 2002, the company did not have many low-income customers: out of its total 1.3 million-customer base, only around 100,000 families lived in LIS neighborhoods. Starting with the project carried out with FPVS, the company had begun to pursue natural gas network expansion projects for LIS neighborhoods with a business approach that differed from the scheme used with traditional customers.
The key dilemma described in this case focuses on Gas Natural BAN’s need to formulate its natural gas network expansion strategy to target LIS neighborhoods. The company’s initial experience, though viewed as successful, had suffered from some inefficiencies that prevented its large-scale application and led management to look for new options to pursue its LIS strategy. As a result, FPVS’ collaboration model and its potential for optimization were questioned. It was also questionable whether the scheme originally used by FPVS in Moreno’s Cuartel V would be applicable to other neighborhoods with different conditions. Gas Natural BAN needs to decide whether to continue working with FPVS in a new project.
This case zeroes in on an inclusive business development based on a collaboration that involved a business company, an NGO and local neighbors. It may be used in graduate programs on business and society, corporate social responsibility, or business strategies targeting the base of the pyramid.