Retail giant Petrolimex seeks to raise foreign ownership to 35%

State-run Petrolimex, Vietnam's biggest gasoline retailer by market share, has proposed the government allow its maximum foreign shareholding to rise from 20% to 35%.

The proposal was presented by Petrolimex's representative at a recent online dialogue between Prime Minister Pham Minh Chinh and leaders of state-owned enterprises.

To back up its proposal, the representative cited the government's policy to keep the state ownership at Petrolimex in the range of over 50% to less than 65%.

35% is the current foreign ownership level at another major petroleum distributor, PV Oil.

Previously, the Ministry of Industry and Trade (MoIT) proposed the government allow foreign investors to have deeper involvement in the country's gasoline retail field.

It argued that Vietnam has opened the doors wider to foreign investment in most important sectors, from electricity, oil and gas to aviation. "Domestic gasoline enterprises already have wide distribution networks, and they need additional investment capital for production and processing to ensure supplies to the domestic market."

The ministry added that foreign shareholding at up to 35% will also help domestic enterprises seize better technologies and corporate governance, while the state, as the majority shareholder, can still maintain its veto right in management.

The recent transfer of 65.7 million Petrolimex shares from ENEOS Corporation, a leading energy group of Japan, to its subsidiary, ENEOS Vietnam, has raised the latter's ownership to 169.2 shares or 13.08% of Petrolimex’s chartered capital. After the transaction, ENEOS Corporation no longer has direct ownership at Petrolimex.

As of March 24, the aggregate foreign stake at Petrolimex is approximately 18%. This means foreign investors can buy an additional 26 million shares as the regulated cap is 20%.

Petrolimex still owns almost 23.3 million treasury shares, which could be sold at some point in the future.

Petrolimex, which is listed on the Ho Chi Minh Stock Exchange (HoSE: PLX), currently holds nearly 50% market share in Vietnam’s gasoline distribution sector, with a retail network of more than 5,500 outlets and 43 subsidiaries directly trading gasoline nationwide, according to the company’s release.

At the dialogue, the representative of Petrolimex said while the corporation's domestic market share is nearly 50% and the figure sometimes surged to 70-80%, it currently owns only 2,500 gasoline outlets or just 20% of the country's total.

Thus, Petrolimex proposed the government direct provincial administrations to offer it priority in deploying gasoline outlets when it comes to their urbanisation and gasoline supply development plans, "to ensure national supply."

The corporation also proposed the government ask the Ministry of Transport and the state-run Vietnam Expressway Corporation (VEC) to offer 50% of gasoline outlets planned for expressways built with state funds or funds from state enterprises to Petrolimex. "Petrolimex will invest in outlets with costs equivalent to costs from biddings and auctions."

In response, Prime Minister Pham Minh Chinh said building an independent and self-reliant economy does not mean isolation and mere self-supply "It means being active and flexible. You run business, you must follow market rules, based on competition. You must find ways to be stronger, based on market rules."