Gov’t to reimburse Petrolimex for fuel trading loss

The Government will cover an estimated loss of VND1.22 trillion incurred by Vietnam National Petroleum Corporation, or Petrolimex, as compensation for its joining the country’s price stabilization program, the company’s top executive said.

Bui Ngoc Bao, chairman and CEO of the company, told investors in a road show on its initial public offering (IPO) in HCMC on Thursday that it estimated the loss of VND1.22 trillion equivalent to nearly US$60 million for the period from January through September prior to its IPO. He did not elaborate on the total loss in the year to date, however.

The Ministry of Finance on June 20 issued a document assuring the company that the Government would create conditions for the company to clean up its balance sheet, Bao said, adding the arrears must be settled when the company becomes a shareholder-owned company after the IPO.

Petrolimex will sell 5.01%, or 52.6 million shares, including 2.45% to be offered to employees of the corporation and 2.56% to be sold to the public. The State will hold 94.99% of the company’s registered capital. The auction of 27.43 million shares will be held at the Hanoi Stock Exchange on July 28 with the initial auction price set at VND15,000 per share.

The company’s chartered capital before equitization is over VND1.43 trillion and its equity after evaluation on January 1 last year was about VND6.16 trillion. Petrolimex’s chartered capital after the initial public offering will be VND10.7 trillion.

Bao told the meeting that if the petrol market is managed under market principles as asserted by the Government, Petrolimex’s profit will be stable in the coming time. The company expects its pre-tax profit will be VND648.5 billion in the fourth quarter this year and VND2.68 trillion in 2012.

In 2010, the after-tax profit of Petrolimex in petrol trading was VND81.15 billion, but thanks to other operations like gas trading, banking, and insurance, the corporation’s consolidated after-tax profit rose to VND535 billion.

Petrolimex now dominates the local petrol market, and imports 55% of the country’s total. Its fuel market share in the country is 54%-55%.

The corporation also exports products to China, Laos, and Cambodia, and holds a 60% market share in the last-named market. Petrolimex now has 2,100 fuel retail stations and 4,000 agencies nationwide.

The auction is not open to foreign investors, who can only participate in the company via strategic deals. Bao, however, affirmed at the meeting that at this time, the corporation had no intention to find a strategic foreign investor.

Petrolimex now has 42 subsidiaries nationwide and Bao said it did not intend to privatize any subsidiary to avoid a possible conflict of interest later.

Between now and 2015, Petrolimex expects to invest in the Nam Van Phong Oil Refinery Project in Khanh Hoa Province with a designed capacity of 10 million tons of crude per year. The total investment capital is about US$4.4-4.8 billion.

Source: SGT

Tags: Vietnam fuel, Vietnam fuel prices