Prime Minister Nguyen Tan Dung has ordered Petro Vietnam, the state-owned oil and gas giant, to complete all restructuring plans and submit to the Ministry of Industry and Trade for consideration.
After a meeting with cabinet members and Petro Vietnam CEOs, the Prime Minister concluded that the gas company should complete all corporate restructuring proposals and send evaluation reports to the Ministry of Industry and Trade and the Prime Minister’s Office for approval within September.
In a recent meeting, the Government acknowledged the role that Petro Vietnam has played as a major economic group, contributing considerably to the State budget, developing the domestic petroleum industry and even expanding operations to foreign countries.
The Prime Minister said that the Group's business should focus on five production sectors, namely, researching, exploration and exploitation of oil and gas; refining crude oil and production of petrochemicals; producing industrial gas; developing electricity; and offering high quality petroleum service.
However, it has continued to remain ineffective in non-core investments and demonstrated shortcomings in corporate governance, with a number of affiliated enterprises operating without sufficient supervision.
The Prime Minister is therefore urging the restructuring plan to focus on rearrangement of Petro Vietnam affiliates into five main business concentrations or sectors.
PM Dung also required Petro Vietnam to map out the route to withdraw capital invested outside the group's main business areas, especially areas of securities, civil construction, real estate and hotels.
The withdrawal is necessary in order to ensure effective recovery of business operations and each business must preserve the capital with a specific plan in accordance with the direction of the Prime Minister.
Any plan would also forbid Petro Vietnam from forming member councils in single-member limited liability companies it controls, including Petro Vietnam Exploration and Production, Petro Vietnam Oil, Petro Vietnam Power, Binh Son Petrochemical Refinery, Dung Quat Shipbuilding and Ca Mau Fertiliser.
The Petro Vietnam re-organization plan would also build a roadmap for disinvestment from non-core businesses, particularly in securities, civil engineering, real estate development, and tourism and leisure.
In a meeting in July, Petro Vietnam chairman Phung Dinh Thuc admitted that the group had invested more than VND5 trillion (US$238 million) in non-core businesses and had targeted to gradually withdraw from these sectors by 2015.
However, he proposed to the Prime Minister to retain holdings of 18-20 per cent in Petro Vietnam Finance Corporation and Petro Vietnam Insurance Corp, arguing that these were essential to its operations.
However, the Government rejected the proposal for Petro Vietnam Finance and urged the group to devise a specific plan for divesting from the corporation.