The GAIL (India) Ltd and the Engineers India Ltd have turned down government's request to pay special dividends to its shareholders. The public sector companies have said that they have capital expenditure plans lined up, which would use the surplus cash with them.
"The companies have told us that they have already lined up capex and they will use the funds that they have," a petroleum ministry official told the Business Standard.
While the GAIL planned to invest in pipelines, city gas and petrochemicals, the EIL said that the surplus money with the company will be used for implementing turnkey projects that it had bagged in India and abroad.
The move comes close on the heels of a decision by the Oil & Natural Gas Corporation board against paying special dividends. The ONGC board had, however, said that it will consider paying an interim dividend.
The GAIL board had also decided that in case the company was left with some surplus at the end of financial year, it might consider giving a special dividend.
The GAIL has lined up Rs 2,973 crore (Rs 29.73 billion) capital expenditure plans for 2005-06.
The company had cut down its capital expenditure by more than half during the current year. It had earlier planned to invest Rs 3,600 crore (Rs 36 billion) but pending clearance from the government its Dahej-Uran pipeline project could not be taken up during the current year.
The petroleum ministry had also asked the Oil India Ltd to cough up special dividends.
Petroleum ministry officials said that the GAIL and the EIL will also be asked to pay interim dividends over the coming days. Finance ministry officials added that the demand for interim dividends from the ONGC, OIL, GAIL and the EIL will be made along with similar requests to oil marketing companies -- the Indian Oil Corporation, Bharat Petroleum and the Hindustan Petroleum -- after the Centre issued oil bonds to cover their under-recoveries from the sale of petroleum products.
Unlike previous years, the government is expected to ask oil companies to pay interim dividends in January.
The finance ministry had advised the petroleum ministry to seek special dividends from the three companies to help shore up Centre's non-tax revenue. North Block had hoped to generate around Rs 4,000 crore (Rs 40 billion) through special and interim dividends during the current financial year.
Companies, which were not on the disinvestment list, were being asked to cough up special dividends as the finance ministry was of the opinion that they were sitting on enormous cash surplus without adequate capex plans.
