By Chan Quan Min
Petronas dividend payments to the federal government were unaffected during the last oil price rout in 2008, when crude oil prices fell to below US$40 per barrel.
Operational reports for the financial years ended March 2009 and March 2010 showed that Petronas kept up dividend payments of about RM30 billion annually along with other contributions during the Global Financial Crisis.
This despite reduced earnings for the national oil company from an oil price rout that began in mid-2008 lasting for more than a year.
“Despite lower profits, the group increased its payment to the government — in particular, payments to government rose 20.1% to RM74 billion,” Petronas wrote in its 2009 (ended March) operational review.
The following year, Petronas again sacrificed profitability in order to meet its payment commitments to the federal government.
“”Despite a 23.2% decline in net profit after minority interest, the group retained its dividend payment to the federal government at last year’s level of RM30 billion,” Petronas wrote in its 2010 (ended March) operational review.
“Reflecting this, the group’s dividend payout ratio climbed further to 74% from last year’s level of 57% and is substantially higher than was typically the case in previous years.”
The 2009 report also spoke of the national oil company’s “ongoing challenge of maintaining the recent momentum of its business expansion insofar as adequate reinvestment is critical to ensuring the long term sustainability of the group’s operations.”
Between 2009 and 2013, contributions made by Petronas to state coffers ranged from RM57.6 billion to RM80 billion. These contributions are made up of dividend payments, taxes, royalties and export duties.
For dividend payments alone, Petronas paid RM30 billion annually to the federal government between 2009 and 2011. In 2012, the dividend payment was reduced to RM28 billion and in 2013, further reduced to RM27 billion.
Petronas contribution to the federal government have not kept up pace with revenue growth. In 2013, revenue was reported at a record RM317 billion. Pre-tax profit that same year stood at RM94.3 billion. Financial results for 2014 have not yet been announced.
Most analyst say Petronas will not drastically reduce its contribution to state coffers in 2015 despite CEO Shamsul Azhar Abbas claims of a 37% cut.
According to the Petronas Development Act of 1974, final management decisions rest with the Prime Minister Najib Abdul Razak, who will be announcing a review to Budget 2015 tomorrow.
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