VietNamNet Bridge – Vietnam does not intend to sell stakes in petroleum distribution companies to foreign investors, affirming that this does not come contrary to its WTO commitments.
The information that some petroleum companies are going equitized has caught the special attention from the public and foreign investors, who always see petroleum distribution as an attractive business field and have got ready to inject money in the companies. However, foreign investors will not have the opportunities to invest in the lucrative field.
Petect, a subsidiary of the Vietnam National Oil and Gas Group (PetroVietnam) is preparing for its equitization. Meanwhile, Petrolimex is going to make IPO (initial public offering) in late July.
Both Petec and Petrolimex are the big guys in the market, and their equitization would be big events in the market in 2011. This is for the first time Vietnam opens the petroleum market for private investors. To date, this has been considered the “domain” of state owned enterprises only.
It is understandable why foreign investors have been eyeing the lucrative business field. A high ranking executive of Petect said it has received the proposals from foreign partners to purchase Petect’s shares when Petect goes equitized.
The enterprise has sent a document to the Government, reporting about the foreign investors’ willing to make investment in Petec. Holding stakes of Petect will mean that foreign investors will be able to import and distribute petroleum products in Vietnam.
However, the executive said Petec has received the official answer from the government which says “no”. Petroleum trade and distribution is the field which Vietnam does not open to foreign investors.
Petrolimex, which is holding 60 percent of the distribution market share, has reportedly completed the drawing up of the equitization plan, and it is awaiting an IPO.
An executive of Petrolimex said under the equitization plan, the State will keep its capital in Petrolimex, while the corporation will issue 5.1 percent of stakes more to increase its chartered capital.
It is expected that the percentage of shares the State will hold after the IPO will be 94.99 percent. A part of shares will be sold to the corporation’s staff, the trade union (2.45 percent). Meanwhile, 2.56 percent of shares will be sold under the mode of public auction (27,425,933 shares). The starting price is 15,000 dong per share.
According to the Hanoi Stock Exchange, Petrolimex will also have domestic investors only, including institutional and individual investors. There will be no foreign investor in Petrolimex.
An official from the Ministry of Industry and Trade said that the absence of foreign investors in domestic petroleum companies is anticipated, and that Vietnam does not break its WTO commitments when not allowing foreign investors to jump into the petroleum sector.
Petroleum distribution is one of the few sectors Vietnam did not commit to open to foreign investors. In the past, some big international conglomerates once came to Vietnam, proposing to run oil refinery projects associated with the right to distribute products in Vietnam. However, they left Vietnam after they were rejected.
On July 12, Petrolimex organized a press conference, officially declaring the IPO to be made on July 28.
The press conference was held just five days after the day when the Ministry of Finance stated that the petroleum prices will not decrease despite the price decreases in the world market, and that petroleum companies now can make profits.
Analysts have commented that the statement by the Ministry of Finance can well support the IPO plan by Petrolimex. People regularly hear the news that petroleum companies only can make little profits, because they are forced to sell products at the prices lower than the cost prices, in order to stabilize the domestic market.
In fact, analysts say petroleum companies’ stake remain attractive despite the modest profits announced by the companies.
Minh Son – Pham Huyen