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PetroVietnam, EVN Prepare for switch to holding companies

State-owned corporations PetroVietnam and Electricity of Vietnam are preparing schemes for their conversion into holding companies and subsidiaries, a senior government official said.

Priority in the plan goes to matters of capital ownership and defining the interests and responsibilities of the planned parent companies and their subsidiaries, said Tran Tien Cuong, head of the business division at the Central Economic Research Institute.

PetroVietnam, established in 1995, has 17 corporate affiliates, 10 of which operate with their own capital and a 15,000-strong workforce.

Under the scheme, the capable affiliates will be transformed into one-member liability-limited companies and the service providers equitized, while non-productive affiliates will be restructured and stay under PetroVietnam's management.

After restructuring, the corporation's affiliates will mainly be one member liability-limited and shareholding concerns. However, a few are likely to be converted into liability-limited companies of two or more stakeholders, or other business forms.

PetroVietnam intends to retain a controlling interest in equitized companies involved in oil and gas production, trading and services so that it can directly control their operations and appoint and dismiss board members.

Former member companies in which the corporation does not retain a controlling stake will operate independently under the Enterprise Law. "However, PetroVietnam will still be responsible for the tax payments of all affiliates as required by the Enterprise Law," Petro Vietnam general director Nguyen Xuan Nham said.

Electricity of Vietnam (EVN) is also seeking a new lease of life as a holding company with more control over its member companies, which would be more like true subsidiaries than is the case at present.

"The relationship between the parent company and each subsidiary will depend on the proportion of capital the parent contributes," EVN deputy general director Tran Viet Ngai said.

"In order to maintain control over senior appointments and crucial business decisions, EVN will inject major capital to hold bigger stakes in large power station operators and power distributors," Ngai said.

The corporation's scheme for conversion to holding company form envisions making affiliates into either one member liability-limited companies owned by the State or shareholding concerns.

"The service providers will be retained but their operations should be separate from those of the planned holding company," Ngai said.