OIL PSU's EMPTY HAND TO THE GOVERNMENT

Oil PSUs may find it difficult to maintain the dividend payout to the government this fiscal although the state-owned NTPC has promised to give more to the exchequer at a meeting of the select PSU chiefs called by Finance Minister P Chidambaram today. The minister met the heads of Indian Oil Corporation (IOC), Oil India, NTPC, BHEL and Power Grid to discuss their capex plans and explore the possibility of getting higher dividend from them.

At present, all profit-making central public sector undertakings (CPSU) are required to declare a minimum dividend on equity of 20 per cent or a minimum dividend payout of 20 per cent of post-tax profit, whichever is higher, subject to availability of disposable profits. In the last fiscal, the government had originally budgeted a dividend income of Rs 27,178 crore from PSUs. However, this went up to Rs 29,996 crore in the revised estimates as companies paid higher dividend on demand from the Finance Ministry. In order to boost industrial production, Finance Ministry has been pressing all the public sector entities to make investment as per their capex plan for the current fiscal. The Finance Ministry believes dividend from CPSUs is a return on investment made by the government and it should be commensurate with profits. Last fiscal, the government received Rs 55,443 crore as dividend and profit.

The Finance Ministry said in the case of PSUs with large disposable profits or healthy cash reserves, a higher or special dividend may also be considered. Government is banking on dividend mop up to keep its fiscal budget on track. With less non-tax revenues in kitty, the fiscal deficit has already touched 94 per cent of budget estimates in the April-November period. Government aims to contain fiscal deficit at 4.8 per cent of GDP in the current fiscal.

"Our PAT (profit after tax) may be slightly lower than last year. So there are problems is terms of upping it (dividend). If the PAT is more we will pay more, if it is less, we will pay less," Petroleum Secretary Vivek Rae told reporters here. NTPC CMD Arup Roy Choudhury said the dividend payout would be similar to last year or may be better. "Dividend will be as it was last fiscal or may be better. There are issues on capex. We have problems in Uttarakhand, projects did not take off. We had a set back in one of the projects in Assam. We are going to do our capex, that is what we told the FM," Choudhury said.
Power Grid CMD R N Nayak and BHEL CMD B P Rao said they discussed capex plans with the FM. "PGCIL will give dividend in line with last year," Nayak said. Rae said last year OIL and IOC paid roughly 50 per cent and 30 per cent of PAT as divided. "So the same pattern will be followed this year as well," Rae said, adding, last year IOC paid Rs 1,188 crore as dividend to government and OIL paid about the same.
Since the government shareholding has come down pursuant to OIL disinvestment, the dividend from the company to government will come down proportionately this fiscal.
In the 2013-14 budget, the government has estimated to garner Rs 29,870 crore as dividend from PSUs.Further, Rs 43,996 crore is estimated to flow in from PSU banks and Reserve Bank of India under the same head.