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

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.