KUALA LUMPUR: State oil company Petronas is considering raising this year’s dividend to help the government fund its nearly US$60 billion stimulus package, according to people familiar with the matter.
Petronas, or Petroliam Nasional Bhd, could increase the payout by as much as RM10 billion (US$2.3 billion), said one of the people, who asked not to be named as the information is private. The company had earlier announced that it would pay RM24 billion in dividend this year.
A higher payout would help Prime Minister Muhyiddin Yassin fund the government’s RM260 billion stimulus package, which is aimed at shoring up an economy that’s struggling with the impact of the pandemic and a crash in oil prices.
Even with the stimulus, the central bank expects gross domestic product to shrink as much as 2% or grow up to 0.5% this year.
Deliberations on the dividend increase are still ongoing, the people said. Any additional dividends, which is subject to approval of the board, will need to take into account factors including funding requirements for operations and ability to service debts and other obligations, a representative for Petronas said in an emailed response to Bloomberg News.
Petronas was asked to pay RM54 billion of dividend last year, including a RM30 billion one-time special payment, as the government struggled to narrow the budget deficit after revising its consumer tax policy.
The payout increase this year would come after the company sold US$6 billion of bonds this month, the biggest offering by a company in Asia in 2020.
Fitch Ratings revised its outlook of Petronas to negative, from stable, while affirming its A- rating on April 14. The state oil firm had cash holdings of RM123 billion against total debt of around RM55 billion at end-2019, and the government is expected to support the company in maintaining a healthy credit profile due to its importance to state revenue, Fitch said in the report. - FMT
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