VietNamNet Bridge - Foreign petrol distributors have set foot in the Vietnamese market, but they will have to confront Petrolimex, the giant which holds 50 percent of market share, and other rivals. 

Petrolimex is dominating the domestic petroleum distribution market

After Idemitsu Kosan opened its first filling station in Hanoi, the Japanese investor planned to set up another one in Hai Phong City. 

Meanwhile, PV Oil and Binh Son Refinery (BSR) are preparing for their IPOs in early 2018. 

All these factors show that changes in the petroleum distribution market will occur and the dominance by Vietnamese distributors is over.

BSR plans to have an IPO on HOSE in mid-January. A 49 percent BSR stake will be sold to strategic shareholders, Vietnamese or foreign.

These include World Petro (the US), Rosneft (Russia), SK Group (South Korea), PTT (Thailand), Kuwait national oil & gas group and MacronPetro (Africa).

Under the Enterprise Law, if holding a 36 percent stake or more, the state, as founding shareholder, will have the right to veto decisions by the board of directors.

With the IPO date on January 25, PV Oil announced it will sell a 65 percent stake. This means that the state will hold a 35 percent stake of the big distributor.

Under the Enterprise Law, if holding a 36 percent stake or more, the state, as founding shareholder, will have the right to veto decisions by the board of directors. 

However, with the plan to retain a 35 percent stake, the state shows that it is willing to give the enterprise to strategic investors, including foreign ones.

The events that occurred recently also show that foreign investors are step by step penetrating more deeply into the Vietnamese market. 

Idemitsu Kosan’s office chief representative Nobuyuki Nakamura had a meeting with Hai Phong City’s Mayor Nguyen Van Tung on a plan to set up a 10,000 square meter filling station in the city.

Analysts commented that foreign investors are taking wise moves entering the market through BSR and PV Oil. 

Vietnam doesn’t want foreign firms taking over the market but it had allowed foreign investors in Nghi Son oil refinery project to distribute petrol products for 10 years.

PV Oil has committed to consume Nghi Son’s products for at least 10 years after equitization. In other words, Nghi Son is the only door through which foreign investors can enter the Vietnamese market.

The presence of foreign investors in the domestic market will cause big changes. However, analysts warned that it will be not easy to scramble for market share with giants like Petrolimex.

Petrolimex has revealed it will invest VND1 trillion to develop a distribution network this year.

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Thanh Mai