The government has asked public sector companies, including Oil and Natural Gas Corporation, Gail (India) Ltd, Engineers India Ltd and Oil India Ltd, to pay special dividends.
Special and interim dividends are expected to help the Centre generate around Rs 4,000 crore (Rs 40 billion) from public sector companies during the current financial year.
Officials told Business Standard on Thursday that a demand was likely to be made on other PSUs as well to help the government improve its fiscal health.
This is the first time that public sector firms, not on the sell-off list, are being asked to cough up special dividends as the government is of the opinion that these companies have enormous surplus cash and do not have adequate capital expenditure plans.
The petroleum ministry had written to the companies asking their boards to consider making the payments at the earliest, said officials.
Officials said downstream petroleum companies like Indian Oil Corporation, which were already facing pressure due to under-recoveries on petroleum products, were spared considering their financial situation.
ONGC, Gail and OIL are also paying Rs 3,249 crore (Rs 32.49 billion) in burden-sharing after under-recoveries by downstream companies because of non-revision of petroleum prices.
The demand for dividends has been made after a recent meeting of Finance Minister P Chidambaram with financial advisers of various ministries. It was pointed out at the meeting that PSUs were sitting on large cash reserves.
Following the meeting, the finance ministry and the Planning Commission were asked to prepare a list of such companies. The government had mopped up Rs 13,437 crore (Rs 134.37 billion) by way of dividends from PSUs during 2004-05. It has budgeted to collect Rs 16,091.74 crore (Rs 160.92 billion) during the current financial year.
According to the last PSE survey, at the end of March 2003, the debt-equity ratio for over 200 PSUs was estimated at 0.87:1 against 0.95:1 of the previous financial year. The survey also said the dividend payout by the PSUs was over 42.7 per cent during 2002-03.
Tapping surplus
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ONGC, Gail (India) Ltd, Engineers India Ltd and Oil India Ltd have been asked to pay special dividends
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Govt has collected Rs 13,437 crore by way of dividends from PSUs during 2004-05 against a budgeted Rs 16,091.74 crore during the current fiscal
- Govt believes the PSUs are sitting on enormous cash surplus without adequate capex plans
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