Bumper Petronas profit heaven sent for Anwar’s government

 

Petronas will likely double its dividend to the government to RM50 billion ringgit this year. (Reuters pic)

PETALING JAYA: Petroliam Nasional Bhd’s (Petronas) impressive revenue and profit in the third quarter ended Sept 30 (Q3 FY2022) will certainly be well received in Putrajaya by the new Pakatan Harapan (PH) led government.

The state energy company’s Q3 net profit surged 88% year-on-year to RM30.8 billion from RM16.3 billion a year earlier. On a quarterly basis, the net profit was a 33.9% increase from RM23 billion in Q2 FY2022.

Strong crude oil prices and the weak ringgit helped push revenue up 60.5% to RM99.2 billion, from RM61.8 billion a year ago, Petronas said in a statement.

For the first nine months of 2022, the group posted an improved revenue of RM271.3 billion, compared to RM171.4 billion in the corresponding period last year, due mainly to favourable price impact for major products aligned with higher benchmark prices.

Profit after tax (PAT) improved to RM77.2 billion and earnings before interest, tax, depreciation and amortisation (Ebitda) was at RM130.2 billion.

The bumper profit enjoyed by the state national oil corporation will mean a significantly higher dividend payment to Putrajaya this year. As Petronas’ sole shareholder, the government can expect more than the RM25 billion dividend it received last year.

In fact, president and Group CEO Tengku Muhammad Taufik had said Petronas would double its dividend to the government to RM50 billion ringgit this year. He said this at a media briefing in late August after the company released its second quarter results.

The company was earlier expected to pay RM25 billion, but the government “made a request” for a higher amount, Taufik had said.

Given that net profit for Q3 rose 33.9% from RM23 billion in Q2 FY2022, it remains to be seen if Petronas will make an even higher dividend payment.

The company has often been likened to a cash cow for the government, and the oil and gas windfall it receives is used to finance a national budget bloated by the estimated RM80 billion in subsidies and cash aid to offset the effects of inflation.

This massive subsidy bill has been inherited by the government led by new PM Anwar Ibrahim. While critics say such untargeted subsidies are unsustainable in the long term, Anwar will certainly be glad the Ukraine crisis and sanctions against Russia have precipitated a surge in global oil and gas prices.

The additional billions in dividend from Petronas will be heaven sent given the new administration may well be forced to adopt an expansionary budget in the event global economic conditions deteriorate further next year.

Commenting on the outlook for the company, Taufik acknowledged that oil and gas prices will remain volatile, influenced by intensifying geopolitical and economic headwinds.

“In the face of the unprecedented global energy crisis, Petronas will focus on safely delivering commercial and operational excellence. Petronas will continue to invest responsibly towards ensuring energy supply security whilst pursuing its growth strategy and net zero carbon emissions target by 2050.

“As we look forward, Petronas is resolute in accelerating growth with increased investments, particularly in future-proofing our portfolio in an environment that is increasingly uncertain and volatile,” he said.

He said the group’s strong performance was driven by its focus on safely delivering commercial and operational excellence across the integrated value chain, supported by high commodity prices.

Petronas’ total assets strengthened to RM725.6 billion as at Sept 30, 2022, compared to RM635 billion as at Dec 31 last year.

Shareholders’ equity increased to RM386.2 billion as at Sept 30, 2022, compared to RM350.8 billion as at Dec 31, 2021, mainly attributable to profit recorded during the period. - FMT