Seeking to shore up its finances, the finance ministry has asked cash-rich oil public sector undertakings (PSUs) like Oil and Natural Gas Corp (ONGC) to consider special dividend over and above the 30 per cent interim dividend they anyway have to pay.
According to norms, all profit-making state-owned firms are required to declare a minimum 20 per cent dividend on equity or a minimum dividend payout of 20 per cent of post-tax profits, whichever is higher.
The finance ministry on October 31 wrote to the petroleum ministry saying the minimum dividend payout for PSUs in oil and gas, chemical and other infrastructure sectors would be 30 per cent this year.
While fuel retailers Indian Oil, Hindustan Petroleum and Bharat Petroleum are in the red, ONGC, Oil India and GAIL India have made healthy profits in the first six months of current financial year. “Dividend from central PSUs (CPSUs), being a return on investment made by the government, should be commensurate with the profits of the company.
“A lower than reasonable level of dividend would be construed as an implicit subsidy which the government can ill afford, given the level of its commitments especially in the social sector, and its obligations to meet the fiscal targets,” the finance ministry wrote.
It asked the petroleum ministry to “ensure” a minimum 30 per cent interim dividend payout by profitable PSUs. “In case of undertakings with large disposable profits/ healthy cash reserves, higher/special dividends may also be considered as the guidelines indicate only the minimum level of dividend,” the finance ministry added.
ONGC has seen its net profit jump nearly 41 per cent to Ra 12,737 crore in April-September period. With such profits, it is likely to consider a 30 per cent interim dividend besides a special dividend.
Gas utility GAIL reported a 15 per cent rise in net profit in H1 to Ra 2,029 crore while Oil India Ltd (OIL) has seen its net profit jump to Ra 1,988.13 crore from Ra 1,417.14 crore during the period.
On the other hand, oil refining and fuel marketing companies are in the red because the government has not provided them with adequate subsidy for losses they incur on selling diesel, domestic LPG and kerosene below cost.
IOC had reported a net loss of Ra 11,204 crore in April-September, while HPCL had a net loss of Ra 6,445 crore. BPCL had reported a net loss of Ra 5,791 crore in H1. Sources said petroleum ministry has already asked the profitable PSUs to hold board meetings for consideration of the interim dividend.
