PSUs are not ready to pay higher dividend

The finance ministry, on Friday, failed to obtain an assurance of larger dividend receipt from companies in the energy sector with large power sector PSUs saying they would retain the payout at last year’s level.

Oil marketing companies, which are facing problems on account of rise in crude oil prices in the international market, told the finance ministry that their dividend payout would depend upon subsidies to be provided by the government.

Pressed hard for funds, finance ministry officials are meeting with the heads of PSUs to persuade them to increase dividend payment to the government. A meeting in this regard was held on Friday.

On Thursday, Department of Economic Affairs Secretary R Gopalan had met representatives of steel and mining companies which also indicated that they would retain the dividend paid last year.

“The final dividend would depend on the subsidy burden. If the burden remains reasonable, then we will give what we normally do - that is between 320 to 330 per cent. Hopefully, it should be in that range, if subsidy burden does not increase unduly,” ONGC Chairman and MD Sudhir Vasudeva said.

Power Finance Corporation CMD Satnam Singh said, “We gave 50 per cent dividend last year. Being a listed company, we would give atleast 50 per cent dividend this year as well.”

Besides heads of ONGC and PFC, Friday’s meeting was attended by CMDs of Oil India, IOC, GAIL, Rural Electrification Corporation and SJVNL.

IOC Chairman R S Butola said in the current fiscal the company is likely to face under-recoveries of Rs 76,000 crore.

“In the first half we had Rs 35,600 crore of under recoveries. So we are looking at additional support from the government,” Butola said adding that the government is yet to make cash disbursal of Rs 16,000 crore for the first half of the year as subsidy.

The government is seeking higher dividends from PSUs to tide over the financial problem which got aggravated because of rising subsidy bill and slow progress on the disinvestment front.

“We paid 36 per cent dividend last year, we could pay more this year depending upon the profit,” SJVNL Chairman R P Singh said.

REC Chairman Rajeev Sharma too said that the company would retain its last year's dividend payout of 28 per cent of profit after tax (PAT) this year as well.

Oil India CMD N M Borah said, “There are chances of paying more than last year’s 375 per cent but it is very difficult to say because there is subsidy burden as well.”

While the subsidy bill during the current fiscal is expected to shoot up by an additional Rs 1 lakh crore, the government is unlikely to meet the disinvestment target of Rs 40,000 crore.

The government has already announced borrowing an additional Rs 90,000 crore to bridge the revenue-expenditure gap.

There are apprehensions that the Centre’s fiscal deficit, the gap between overall revenue and expenditure, is likely to exceed the Budget estimate of 4.6 per cent of GDP in this fiscal. Under the existing norms, profit-making PSUs are required to declare a dividend of at least 20 per cent of government's equity investment, or 20 per cent of post-tax profit, whichever is higher.

In the case of oil, petroleum, chemicals and other infrastructure industries, the pay-out has to be at least 30 per cent of post-tax profits.