Rethink plan to collect dividends from Petronas, Putrajaya urged

PETALING JAYA: An economist has urged Putrajaya to reconsider its plans to collect some RM80 billion in dividend payments from Petronas, following the decision by a US rating agency to downgrade the oil giant’s outlook from stable to negative.

Barjoyai Bardai of Universiti Tun Abdul Razak said although Moody’s view was based on the government’s plans for Petronas and not dividends which had already been paid out, it carried weight as it came from a renowned credit rating agency.

He told FMT that Putrajaya could still review its plans given that Budget 2019 was based on a conservative US$70 per barrel and included the introduction of four new taxes as well as increases in some existing taxes.

He recommended that the government adopt a wait-and-see approach to determine how much additional revenue it could collect from the increase in oil prices and taxes instead of relying on dividend payouts from Petronas.

Former second finance minister Johari Abdul Ghani said in the past that an increase of just US$1 per barrel in the global oil price would see the government earning a revenue increase of RM300 million a year.

Barjoyai said the government should talk to Moody’s and explain that the plan to collect higher dividends from Petronas is not set in stone.

“On the other hand, the downgrading of Petronas’ outlook could affect its chances of securing funding for huge projects in the future,” he added.

Universiti Malaysia Kelantan’s Abu Sofian Yaacob said it was only natural that Petronas’ credit ratings take a dive following the tabling of Budget 2019, where Finance Minister Lim Guan Eng had touched on the dividend payouts.

Abu, who is from the faculty of entrepreneurship and business, said the government was sending out signals that Petronas, as the goose which lays the golden eggs, would be forced to lay more.

“Unless the oil price increases in the near future or there are other investment incomes for Petronas, the outlook will remain.

“My advice to the government is to revise the plan and try to get income from other sources or government-linked companies.”

Yesterday, former prime minister Najib Razak warned that the country’s credit rating could be affected following Moody’s decision to downgrade Petronas’ outlook.

Moody’s said the rating action was due to the government’s announcement that Petronas would be paying RM26 billion in dividends in 2018 and RM54 billion (inclusive of a one-off special dividend of RM30 billion) in 2019.

On Nov 2, Prime Minister Dr Mahathir Mohamad said Petronas could afford to contribute the RM30 billion special dividend to the federal government in 2019 due to higher oil prices. - FMT