Oil companies might have to borrow money to pay the dividend.
The government has sought a record dividend of Rs 19,000 crore from state-run oil companies to boost its finances, The Economic Times reported.
Company executives told the paper that the finance ministry’s request comes at a time of declining profits and despite the government's reduced stake in oil companies.
“What they are asking for is not in sync with the profits reported so far this year,” an executive told the paper.
Companies are trying to negotiate with the government to lower the final amount owed as they might have to borrow money to clear the payment, the report said.
Moneycontrol could not independently verify the story.
ONGC has been asked to shell out Rs 6,500 crore, while Indian Oil has been asked to pay Rs 5,500 crore, sources told the paper.
Here’s how much other oil companies are expected to pay as dividend to the government, as per the report:
– Bharat Petroleum (BPCL): Rs 2,500 crore
– GAIL India: Rs 2,000 crore
– Oil India: Rs 1,500 crore
– Engineers India: Rs 1,000 crore
Another executive told the publication that it is alright if the government seeks a high dividend.“Shareholders have expectations of certain return on their investments and the management should try and meet that, irrespective of the annual profit. For large oil companies, borrowing some amount to pay dividend is not a bad idea,” the executive said.