Streamlining the organization for effective and efficient operations through the merger of PTC

On the morning of March 28, 2025, Vietnam National Petroleum Group (Petrolimex, stock code PLX) held the 2025 Extraordinary General Meeting of Shareholders, approving the merger and merger plan of Petrolimex Petroleum Services Corporation into Vietnam National Petroleum Group with 100% approval rate.

This is one of the activities in the process of restructuring and streamlining the apparatus according to the Project on restructuring the Vietnam National Petroleum Group for the period 2021-2025, with a vision to 2035, closely following the policies and orientations of Resolution 18-NQ/TW dated October 25, 2017 of the Party Central Committee.

Petrolimex Petroleum Services Corporation (PTC) was established under the Project approved in Decision No. 515/PLX-QD-HDQT dated September 20, 2017 of the Board of Directors of the Group, officially put into operation from October 1, 2017 with an initial charter capital of VND 300 billion, and at the same time received and managed all of Petrolimex's capital invested in transportation companies.

The establishment of PTC Corporation at that time was based on the Group's assessment of the current business model of petroleum companies (CTXD) that were not really specialized when they both organized petroleum trading and self-operated petroleum transportation activities. The Group realized that this affected the concentration of expertise and resources for the main field of petroleum trading; at the same time, there were still transportation joint stock companies (CTVT) in the block operating separately, without cohesion, the scope of operations was not comprehensive enough and overlapped with each other, leading to the overall business efficiency of the whole block being limited and there were no conditions for expansion.

Therefore, the establishment of PTC was aimed at optimizing Petrolimex's petroleum transportation activities, meeting future needs in line with the strategic vision of developing PTC into a leading national petroleum transportation company.

The establishment of PTC has basically been carried out according to plan, marking the specialization and professionalization of road petroleum transportation activities of the entire Petrolimex system. However, after nearly 8 years of operation, the organizational and operational model of PTC has revealed many limitations, specifically in demonstrating the role of centralized management of transportation activities; the failure to build a centralized transportation dispatch model, and the slow application of technology in operations have led to a lack of sufficient foundation and conditions to optimize the Logistics work on the transportation of goods of Petrolimex.

With the development orientation, restructuring the organizational and operational model of the Group according to the Petrolimex restructuring project, according to which the Centralized Management and Dispatch Center (DOC) is the place to centralize ordering, dispatching vehicles and managing the operation of road petroleum transportation services nationwide; the management model of CTVT through PTC will no longer be suitable in the new period.

Continuing to maintain the current PTC Corporation model will cause difficulties for the Group in the process of establishing DOC to achieve the goal of optimizing Logistics work on the movement of goods of Petrolimex, reducing transportation costs because it will cause overlap and waste the Group's resources when allowing both models to exist in parallel.

Mr. Pham Van Thanh - Chairman of the Board of Directors of Petrolimex said that the Group determined that restructuring PTC is an important task that the Group must carry out in order to further improve the operational efficiency and competitiveness of the Group in general and the transportation enterprises under Petrolimex in particular; at the same time, the plan to merge PTC into the Group will help Petrolimex's apparatus become streamlined, operate more efficiently and effectively, in accordance with the spirit of Resolution 18.

The merger of PTC into the Group brings specific benefits to Petrolimex as follows:

- The merger associated with the application of the DOC model under the direct management of the Group will create favorable conditions for the implementation of information technology, to fundamentally change the centralized and direct management/administration model to optimize the Logistics work of Petrolimex's goods transportation routes and the resources of the entire system.

- Helps reduce intermediate management units; ensures proper implementation of the Party and State's policies and orientations on streamlining and organizing the apparatus to operate effectively and efficiently.

- Reduce logistics costs, transportation coordination and costs arising from the operations of the Parent Company Office - PTC, thereby contributing to reducing business costs of the entire Petrolimex chain.

- Help the Group recover resources to restructure investments with profits not commensurate with the scale of investment capital; thereby contributing to improving the operational efficiency of Petrolimex, towards the growth target set in the next period.

- Improve operational efficiency and competitiveness of transportation enterprises in the Petrolimex ecosystem in the next phase.

Petrolimex General Director Dao Nam Hai said the group is implementing a new streamlined apparatus, focusing on applying information technology and digitizing the entire freight transport process with the aim of optimizing transport operations. Petrolimex aims to eliminate intermediaries, so that all transported petroleum goods are owned by the group.

A representative of ENEOS - Japan's largest energy corporation and a strategic partner of PLX - expressed full agreement with the PTC merger plan: "Our group also applies the model of a company directly managing logistics activities similar to Petrolimex, concentrating the truck dispatch function through 2 operation centers (DOC) nationwide. Thanks to this structure, we can make quick decisions to deal with daily supply and demand fluctuations. We believe that Petrolimex will achieve cost reduction efficiency through the PTC merger, avoiding duplication of management functions and managing resources reasonably."

Chairman of the Board of Directors of the Group, Mr. Pham Van Thanh also shared at the Congress about the restructuring and streamlining of the apparatus that Petrolimex has carried out in the past and the plan for the coming time. Accordingly, Petrolimex has established a Steering Committee to implement Resolution 18, and has organized the termination of representative offices in Cambodia and Ho Chi Minh City; and will soon stop the operations of some intermediary units such as affiliated branches. It is expected that the termination of the operation of the petroleum branch in Region 1 will be completed in the first quarter, and the same will be done with the petroleum branch in Ho Chi Minh City and branch B12 in the second quarter. The Group will continue to review all intermediary levels and functional departments from the group level to member units to build a streamlined and effective apparatus.

Some pictures at the congress:

Petrolimex Chairman Pham Van Thanh directly answers shareholders' questions

Board Member, General Director of Petrolimex Dao Nam Hai answers shareholders' questions

Petrolimex Board of Directors member Tran Tuan Linh presented a report on the merger and plan to merge PTC into Petrolimex.

Petrolimex Board of Directors member Endo Tsuyoshi answers shareholders' questions

Source: https://www.petrolimex.com.vn/nd/tin-chuyen-nganh/dhdcd-bat-thuong-petrolimex-thong-qua-viec-sap-nhap-tct-dich-vu-xang-dau-petrolimex-vao-tap-doan.html