PETRONAS PAYING AN ADDITIONAL RM10 BILLION DIVIDEND TO GOVT
Oil firm says it remains resolute in efforts to preserve cash, strengthen resilience
PETROLIAM Nasional Bhd (Petronas) will pay an additional RM10 billion dividend to the government by the end of this month. The national oil firm said this would push its total dividend payout for the year to RM34 billion.
Last year, Petronas paid the government RM54 billion in dividends, including a special dividend of RM30 billion.
In a statement yesterday, Petronas said it had previously committed to maintain the scheduled RM24 billion dividend payment to the government this year based on its financial year 2019 performance.
“(Petronas) can confirm that it has fully paid the dividend as per the plan for this year. However, given the unprecedented challenges brought about by the Covid-19 pandemic, the Petronas board approved to pay an additional RM10 billion dividend to its shareholder by the end of this month.”
It added that in determining whether the additional dividend was affordable, the board had first satisfied itself that the company could comfortably continue to fund its operations, service its debts and meet its obligations as well as invest in its future growth.
“Petronas remains resolute in its efforts to preserve cash and strengthen our financial resilience during this unprecedented time,” it said.
Meanwhile, OCBC Bank said it expected Petronas to pay the government a RM18 billion dividend next year.
“While the expected drop is, in some ways, due to the frontloading of the RM10 billion special dividend to help plug this year’s fiscal gap, it is nonetheless a remarkable decline in oil’s contribution,” said its economist Wellian Wiranto.
Assuming the amount remained that way, the Petronas dividend would likely drop to 6.8 per cent of total government revenue next year from 15 per cent previously, he said.
With a smaller direct support from Petronas, Wellian said Malaysia’s expenditure plan would have to hinge upon a relatively sharp 13.8 per cent uptick in tax revenues next year.
“Indeed, next year’s tax intake is slated to come in at only 3.4 per cent lower than the pre-Covid-19 era level last year.”
Overall, Wellian said the 2021 Budget’s spending plan reflected attempts to counter a host of challenges facing Malaysia now.
“From wage subsidies to direct cash aids, the budget looks to soothe where it hurts most.”
Malaysia is projecting an economic growth of 6.5 to 7.5 per cent next year, above OCBC Bank’s baseline expectation of around 6.0 per cent.
If the economy were to fail to pick up as much as expected, the government would take in less while having to spend more, thus pushing up the deficit and debt ratio, he added.