KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) will pay an additional RM10 billion dividend to the government, given the unprecedented challenges brought about by the Covid-19 pandemic.
Responding to recent reports, Petronas said the RM10 billion would be paid by the end of the month, pushing the total dividend payout to RM34 billion.
Minister in the Prime Minister's Department in charge of economy Datuk Seri Mustapa Mohamed reportedly said Petronas would pay RM34 billion in dividend to the government this year.
In 2019, Petronas paid the government RM54 billion dividends, including a special dividend of RM30 billion.
It a statement today, Petronas said it had previously committed to maintain the scheduled RM24 billion dividend payment to the government this year based on its financial year 2019 performance.
"(Petronas) can confirm that it has fully paid the dividend as per the plan for this year. However, given the unprecedented challenges brought about by the Covid-19 pandemic, the Petronas board approved to pay an additional RM10 billion dividend to its shareholder by end of November 2020."
The national oil company added that in determining whether the additional dividend was affordable, the board had first satisfied itself that the company could comfortably continue to fund its operations, service its debts and meet its obligations as well as invest in its future growth.
"Petronas remains resolute in its efforts to preserve cash and strengthen our financial resilience during this unprecedented time," it said.
Meanwhile, OCBC Bank expects Petronas' dividend payment to the government to be at just RM18 billion in 2021, shrinking by nearly half from the RM34 billion this year.
"While the expected drop next year is in some ways is merely because of the frontloading of the RM10 billion special dividend to help plug the bigger fiscal gap of 2020, it is nonetheless a remarkable drop in oil's contribution," OCBC Bank economist Wellian Wiranto said in his 2021 Budget reaction.
As a proportion of total government revenue, the contribution of Petronas dividend would have dropped from 15 per cent to just 6.8 per cent next year, assuming the amount stays that way, Wellian added.
Without as much direct support from Petronas, he said Malaysia's expenditure plan hinged upon a relatively sharp uptick of a 13.8 per cent increase in tax revenues in 2021.
"Indeed, tax intake in 2021 is slated to come in at just 3.4 per cent short of the pre-Covid era level in 2019, inherently presuming that economic activities, and hence tax income, resuming a large degree of normalcy.
"Looking into further breakdowns, the budget assumes a higher-than-2019 level of revenue intake in 2021 for corporate and individual income taxes."
Overall, Wellian said the 2021 Budget's spending plan reflected attempts to counter a host of challenges facing Malaysia now.
With pandemic resurgence rearing its ugly head again, forcing an extension of restriction orders for much of Malaysia over the weekend, preserving the nascent economic recovery becomes especially crucial.
"From wage subsidies to protect jobs to direct cash aids to help tide things over, the budget looks to soothe where it hurts most.
"Ultimately, however, although the budget is centred around the notion of 6 R's, with buzzwords such as "Resolve" and "Resilience", its success will depend on another alphabet altogether – V, that is a sharp economic recovery in 2021," he added.
Malaysia is projecting an economic growth of 6.5-7.5 per cent in 2021, above OCBC Bank's baseline expectation of around 6.0 per cent.
If the economy failed to pick up speed as much as expected, the government would take in less and might yet have to spend more, pushing up the deficit and debt ratio up, Wellian said.