Govt denies media reports that OMCs might skip dividend payment this year

Economic affairs secretary S C Garg wrote on Twitter that such reports were fabricated

EconomiC Affairs Secretary S C Garg said in a Twitter post on Tuesday that media reports claiming state-run oil marketing companies might skip dividend payments to government were false. Some TV channels had earlier in the day reported citing sources that Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL) were likely to skip their dividend payout for 2018-19, causing a hit of Rs 80-100 billion.

Such a move, according to the reports, could prove a significant dent in government finances, especially in a year when the Centre’s revenue through sale of shares in public companies is expected to fall Rs 300 billion short of target. 

Amid a weakening of the rupee and high global crude oil prices, India's oil-marketing companies have been under immense pressure for some time. Also, to counter high retail petrol and diesel prices, besides reducing excise duty on these fuels by Rs 1.5 a litre, the government recently asked these companies to absorb Re 1 on sale of every litre, bringing down the effective petrol and diesel price by Rs 2.50 a litre. This move is also likely to hit their earnings during the year.

Meanwhile, it was also reported earlier on Monday that oil-marketing companies had asked the government for an additional Rs 120 billion in subsidy payment for liquefied petroleum gas (LPG) and kerosene. Government support for LPG and kerosene, constituting the petroleum subsidy, is set to increase by 66 per cent over the budgetary estimate for 2018-19. Based on the current prices of the two fuels, the subsidy on these might touch Rs 414.78 billion, against the targeted Rs 249.32 billion.