Petrolimex in the spotlight

The latest financial statements of Petrolimex - a major state group holding around 50 per cent market share in petroleum business - were recently unveiled by the State Audit and have overshadowed the group’s performance.

Accordingly, Petrolimex incurred VND1.423 trillion ($67.7 million) consolidated pre-tax losses from production and business in 2011, of which petroleum trading sector alone counted VND2.358 trillion ($112 million) losses versus VND841 billion ($40 million) profits posted by subsidiary companies.

The State Audit report showed that as of December 31, 2012 parent company Petrolimex poured VND8.271 trillion ($393 million) onto long-term financial investments. Of this huge sum, only VND3.204 trillion ($152 million) tantamount to 38.7 per cent of the group’s equity was pumped into its core petroleum business whereas a big chunk of money was injected into property, banking or insurance areas.

However, whereas its core petroleum business yielded negative returns of around 10 per cent, the actual incomes of employees working at parent company reached VND20.9 million ($1,000) per capita per month, which was viewed as overly high in current context of persistent economic woes which took a heavy toll on the corporate community.

The report also read that the average wage cost per one litre of petrol consumed at petroleum firms hiked an average 30 per cent in 2011 against 2010, much higher than state regulated minimum salary hike level (13.7 per cent).

Exchange rate differences significantly drove up Petrolimex’s financial costs in 2011, with losses from rate differences peaking at VND2.187 trillion ($104 million) in 2011, surging VND1.439 trillion ($68.5 million) against 2010. This was because the group’s equity remained low versus its tremendous demands for import of petroleum products, making the group to source credit from domestic and foreign credit entities to feed operation.

In reality, Petrolimex began operating as a joint stock business from December 1, 2011 after launching the initial public offering of its shares.

After the move the group ought to hand in VND83.2 billion ($3.9 million) to state investment fund State Capital Investment Corporation (SCIC).

However, as of October 27, 2012 only VND65 billion ($3.1 million) was paid to the fund, while Petrolimex had yet to contribute VND18.2 billion ($86,600) to the central fund for supporting enterprises.

In respect to its equitisation, the State Audit detected inaccurate valuations in Petrolimex’s investment venture Petrolimex Petro-chemical (PLC). Accordingly, Petrolimex ‘forgot’ to calculate new shares (over five million) it got through dividend payment at PLC tantamount to VND84.9 billion ($4.04 million).

In this context, Petrolimex was required by the State Audit to pay additional tax of VND74 billion ($3.5 million) to state coffers and contemplate applying measures to boost production and business efficiency and save input costs, paving the way to lower petroleum product prices.