The Viet Nam National Oil and Gas Group, PetroVietnam, should come up with an optimal plan that balances its exploitation of fossil fuels with the nation’s long term needs, a senior official said on Wednesday.
"Our resources are not infinite, and based on the current situation of world oil prices, we need to increase output while ensuring a long-term source of raw materials and energy for the country," said Mai Tien Dung, Minister and Head of the Government Office.
Therefore, PetroVietnam should come up with the most effective exploitation plan, strive to reduce costs, effectively managing cash flows and improve its finance management mechanisms, he said.
Dung made the observations and suggestions as the head of a working group assigned by the Prime Minister to make an inspection visit to the PVN headquarters in Ha Noi.
He said that while business results in the first half of the year show positive signs of recovery, PetroVietnam needs to take more drastic measures to increase its competitiveness and efficiency in operations.
The team also conveyed PM Nguyen Xuan Phuc’s requests for clarification and explanations on a variety of issues including PVN’s personnel structure and the handling of loss-making projects.
Dung said the PM highly appreciated PetroVietnam’s production and business results in the first half of this year, and encouraged the group to work hard to overcome a difficult and challenging period when it has been plagued with mismanagement scandals and huge losses incurred by several unprofitable projects.
The group accomplished all its first-half targets. It reported revenues of VND247.1 trillion (US$10.8 billion) in the first half of the year, exceeding the target by15 per cent and equalling 56 per cent of its yearly goal.
Crude output reached 7.9 million tonnes, two per cent higher than planned for the first half of the year and 52 per cent of the annual plan. Gas production of 5.25 billion cubic metres in the first half of this year equalled 97.6 per cent of the plan.
Dung said PM Phuc has noted that while the group has managed to surpass all business production targets, there were many challenges ahead that required PetroVietnam to carry out “synchronous and effective measures” to tackle remaining problems and train particular focus on some main issues of concern.
Dung also said PetroVietnam should try its best to achieve its target of exploiting 13.28 million tonnes of crude oil and 10.61 billion cubic metres of natural gas in accordance with directions issued by the PM and Ministry of Industry and Trade.
Another aspect that has greatly impacted PetroVietnam’s growth is the inefficient handling of its loss-making projects, including three biofuel factories in Phu Tho, Quang Ngai and Binh Phuoc provinces, the PVTex Dinh Vu Yarn Factory and the Dung Quat ship-building plant, Dung said.
He said the PM’s view was that loss-making projects should be “resolutely handled in accordance with market mechanisms while respecting the principles of self-control and self-responsibility of enterprises”.
He also reiterated the Government’s standpoint that the State will not provide more capital for inefficient projects.
PetroVietnam needs to speed up the investment procedures for tardy thermal power projects including Long Phu 1, Song Hau 1, Thai Binh 2, putting them into operation soon as they will have very strong impacts on the growth of the group as well as the country as a whole, Dung said.
It has to reconsider restructuring and equitising as it plans to deal strictly with inefficient member units, he added.
Clarifying the performance of tasks assigned by the Government and the PM from early 2016, PetroVietnam general director Nguyen Vu Truong Son said the group had accomplished 141 of 189 tasks.
Son said PVN will take drastic measures to handle inefficient projects.
He noted that the MoIT has approved bankruptcy proceedings for the Phu Tho Ethanol Biofuel Plant and the Dung Quang Ship-building Company. It has asked the group to work with foreign investors to resume operations of the Binh Phuoc ethanol biofuel plant, given its role in implementing the E5 biofuel initative slated for next year. The other two products should be restarted before divestment.
However, in order to achieve all its objectives, PetroVietnam has petitioned concerned agencies to approve the reform of its financial mechanisms and corporate management as well as the group’s restructuring plan for the 2016-2020 period, Son said.
He also asked for the State’s support in removing difficulties and problems related to the product consumption of the Nghi Son refinery and petrochemical complex in Thanh Hoa province, besides offsetting losses generated by the difference in the import and export tax rates. — VNS