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Govt taps ONGC for extra dividend

Pradeep Puri in New Delhi

Concerned at the prospect of a huge revenue shortfall this fiscal, the government has decided to ask the cash-surplus Oil and Natural Gas Corporation to shell out more funds for the central kitty by declaring an "additional dividend" for the previous financial year.

ONGC had a huge cash reserve of Rs 28,296 crore (Rs 282.96 billion) in 2001-2002. The firm had declared a 140 per cent dividend for 2001-02, resulting in an outgo of Rs 1,996.3 crore (Rs 19.963 billion). In 2000-01, it had paid a 110 per cent dividend of Rs 1568.5 crore (Rs 15.685 billion).

Though the finance ministry concedes that ONGC has been declaring "highly encouraging" dividends for the last couple of years, it is of the view that the corporation has the capacity to pay more.

The finance ministry is particularly concerned at the estimated shortfall of Rs 15,000 crore (Rs 150 billion) in revenue collection during the year and the fact that it may fall far short of the Rs 12,000 crore (Rs 120 billion) divestment target in view of the virtual derailment of the privatisation process in the recent months.

The finance ministry, which has conducted a series of meetings on the issue, is understood to have identified ONGC as one of the first public sector undertakings that can be tapped for additional funds to partly make up for the funds shortfall.

The finance ministry has also asked other ministries to ensure a larger recovery of dividends from the PSUs, going beyond just a mechanical fulfilment of dividend guidelines.

ONGC, which had the highest net profit of Rs 6,197.9 crore (Rs 61.979 billion), the highest net worth of Rs 29,511.9 crore (Rs 295.119 billion), and the highest market capitalisation of Rs 50,000 crore (Rs 500 billion) among all Indian corporates during 2001-02, is expecting a massive jump in its profits during the current financial year when it will start getting the international price for its crude.

In case it gets the international price for its gas as well, the profits are bound to get a boost during the current year.

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