PM: RM30b special dividend will not hurt Petronas

The bonus comes from excess funds minus operating expenditure, says Dr M


Petroliam Nasional Bhd (Petronas) should not be affected by granting the federal government a special dividend of RM30 billion next year.

Prime Minister (PM) Tun Dr Mahathir Mohamad said on the other hand, receiving the special dividend from Petronas does not also mean that the government is back-tracking to rely on petroleum-based revenue.

He said credit-rating agencies should look at Malaysia’s diversified income base and the current global crude oil prices, which have been encouraging compared to several years ago.

“RM30 billion means that the oil price is about US$70 (RM294) per barrel. I have told them (rating agencies) that 80% of our exports are manufactured goods, not oil.

“Thus, we are not dependent on oil. Yes, sometimes when the price of oil goes up, they give us more money. That’s all,” he told reporters on the sidelines of the 33rd Asean Summit and Related Summits in Singapore yesterday.

The PM also said the special dividend will not impact Petronas negatively as the bonus comes from excess funds minus operating expenditure.

“Petronas wouldn’t give us the money if it affects their operations. They are able to spare the RM30 billion.

“RM30 billion is nothing to them (as) they used to give us RM80 billion at a time when the oil price went up to US$120 per barrel,” he added.

Dr Mahathir said this when asked about the decision by Moody’s Investors Service Inc last week to downgrade Petronas’ ratings outlook to ‘Negative’ from ‘Stable’ due to higher dividend payout to the government.

“The negative outlook on Petronas’ ratings reflects our view that the financial profile of Petronas may deteriorate if the government continues to ask the company to keep dividend payments high, especially should oil prices decline.

“Such a situation would no longer support a ratings level for the company that is currently two notches above that of the sovereign,” the rating agency had stated.

Petronas will pay dividends of RM26 billion in 2018 and RM54 billion (inclusive of a one-off special dividend of RM30 billion) in 2019 to help the government fully settle the outstanding tax refunds estimated at RM37 billion.

Moody’s also said although Petronas can support the dividend payments announced in Budget 2019 and still maintain a net cash position, a further increase in regular dividend payments cannot be ruled out, especially if there is an increase in government funding needs.