PetroVietnam (PVN), the country’s state-run oil and gas giant, is preparing for an unprecedented reform of its organization and investments, in the wake of many prosecutions involving its top executives.
The reform plan, recently submitted to the Ministry of Industry and Trade, would include a gradual streamlining of PVN’s apparatus and the group’s divestment from a number of subsidiaries from now to 2025.
In its report, PVN also asked to be granted special mechanisms that would allow the group to regain financial footing after recent major losses caused by mismanagement.
According to the plan, the number of departments within PVN’s organizational structure will be reduced from 23 to 13 by merging departments with overlapping or closely related duties.
The petroleum behemoth will close one of its three representative offices nationwide as a cost-saving measure.
By 2019 PVN will have completely divested from its subsidiaries including PetroVietnam Maintenance and Repair Corporation (PVMR), PetroVietnam Construction Corporation (PVC), and PetroVietnam Insurance Company (PVI).
Other PVN-owned businesses including PetroVietnam Gas Corporation (PVGas), PetroVietnam Fertilizer and Chemicals Corporation (PVFCCo), and PetroVietnam Ca Mau Fertilizer Company (PVCFC) will be subject to partial divestiture from now to 2020.
Meanwhile, PetroVietnam Exploration and Production Corporation (PVEP) is scheduled for privatization in 2025, when it is expected to have reported three straight years of profitable operations.
The number of businesses where PVN holds a 100 percent stake will be reduced from five to two.
The reform is also set to lower the number of businesses where PVN owns more than 50 percent of the shares from 11 to eight, and businesses where it holds less than 50 percent from 12 to eight.
|PetroVietnam employees take part in a fire drill at the Dung Quat Refinery in Quang Ngai Province in central Vietnam. Photo: Tuoi Tre|
While promising radical changes to ensure its efficient running, PVN also asks for government approval to enjoy special mechanisms.
These include keeping 32 percent of Vietnam’s share of profits earned by foreign companies or joint ventures that extract from oilfields located in Vietnamese waters. The share in 2018 is 28 percent.
PVN also seeks permission to keep half the money it gets from privatization or divestment deals for reinvestment into other businesses, and to spend 17 percent of its revenue on further oilfield surveying.
The oil and gas group looks to issue US$500 million worth of bonds in 2020 and put one coal-fired power plant up for sale until then to balance its cash flow.
Prosecution of former executives
A Hanoi court last month handed 18 years of imprisonment to PVN’s ex-chairman Dinh La Thang for his involvement in a multimillion-dollar loss at the oil and gas group where he was the top leader between 2008 and 2011.
Former PVN deputy general director Nguyen Xuan Son, chief financial officer Ninh Van Quynh and four former members of its board of members were also sentenced to between 15 months in non-custody and 23 years behind bars in the same case.
The defendants were found guilty of economic mismanagement in the loss of VND800 billion ($35.2 million) worth of PVN investment in local lender OceanBank.
|Dinh La Thang, former chairman of PVN, stands trial at a Hanoi court in January 2018 for violating state regulations on economic management. Photo: Tuoi Tre|
In January, Thang was condemned to 13 years in prison in another case involving his wrongdoings as chief of PVN that resulted in losses of VND119 billion ($5.24 million).
Thang, along with PVC former chairman Trinh Xuan Thanh, PVC former general director Vu Duc Thuan and 20 other defendants had stood trial for violating state regulations on economic management and embezzlement of property.
Thanh was penalized with lifetime imprisonment, while Thuan was sentenced to 22 years in prison for serious violations.
The other defendants received jail terms ranging from 17 months to 16 years, some being given non-custodial sentences.
Dinh La Thang was previously a member of the Politburo, the all-powerful body of the Communist Party of Vietnam, from January 27, 2016 to May 7, 2017.
He was also secretary of the Ho Chi Minh City Party Committee from February 5, 2016 to May 10, 2017.