Vietnamese Deputy Prime Minister Trinh Dinh Dung has called on state-run oil giant PetroVietnam to push ahead with a restructure of its businesses.
The comment, made at a company conference, comes as Hanoi ramps up efforts to privatise state-owned enterprises (SOEs) to unlock capital and improve performance.
Earlier this month PetroVietnam’s downstream unit, Binh Son Refinery (BSR), floated 8 million shares in PetroVietnam Building and Commercial on the Hanoi Stock Exchange (HNX). This represented 45.5% of the plastics and packaging manufacturer’s capital, estimated at 175 billion dong (US$7.8 billion) by Vietnam.net on July 21.
BSR only managed to secure buyers for 2.3 million shares, however, raising a total of 28.4 billion dong (US$1.3 billion). PetroVietnam Building and Commercial generated an income of 10.8 billion dong (US$483,000) in 2015, but aims to expand profits by 30% per year in the future.
PetroVietnam Machinery and Technology, which produces machinery parts and equipment for the oil and gas industry, is expected to list its shares soon. It managed to increase sales by 11% to 664 billion dong (US$30 million) last year, which supported a 4% rise in profits to 15.6 billion dong (US$700,000).
The Vietnamese government intends to offload stakes in BSR, electricity provider PetroVietnam Power and PetroVietnam Oil before the end of the year.
PetroVietnam Power is the Asian country’s second biggest electricity company, accounting for 10% of national generation. Hanoi aims to launch an initial public offering (IPO) for a quarter of the utility’s shares in October.
PetroVietnam Oil, which trades crude and petroleum products both on the domestic market and internationally, will shed up to 25% of its equity in the fourth quarter.
This is around the same time that BSR’s shares are scheduled to be floated. The company operates Vietnam’s 130,000 barrel per day Dung Quat refinery in Quang Ngai Province, which is due to undergo an expansion.
Vietnam’s ruling communist party has gradually been adopting a more market-based approach to its economy in recent years.
Hanoi’s privatisation drive aims to stimulate economic growth while reducing state debt, which accounted for more than 60% of GDP last year. Still, economists have criticised the government’s slow progress in transferring SOEs to the private sector.
Furthermore, the success of IPOs has been hindered by a lack of available information on the financial and operational state of companies on offer, as well as the government’s reluctance to part with larger stakes.
As part of efforts to liberalise its oil industry, the government agreed to sell a 49% stake in the Dung Quat refinery to Russia’s Gazprom in 2015.
The Moscow-based company backed out of the deal in January, however. It is believed that the facility’s inability to compete with fuel imports was a factor in Gazprom’s decision.