KUALA LUMPUR: The federal government will receive RM3 billion less as dividend from Petroliam Nasional Bhd (Petronas) this year, compared with 2014, despite Prime Minister Datuk Seri Najib Razak’s call for government-linked companies to pay out more dividends.

Last Friday, Petronas president and chief executive officer Datuk Wan Zulkiflee Wan Ariffin announced that the national oil firm had decided to pay RM26 billion as dividend to its sole shareholder, the federal government, this year. The sum is the lowest since 2008, when it paid RM24 billion after the collapse of crude oil price from US$145 (RM522) to US$40.

“I think the dividend this year has been decided upon; it’s slightly lower than what was paid last year. Going forward, of course, it is a factor of profits we make for 2016, but this year, it is lower than last year,” he told the media during Petronas’ press briefing last Friday, for the first quarter of the financial year ended March 31, 2015 (1QFY15).

Already, Petronas has paid RM4 billion out of the RM26 billion committed to the federal government in 1QFY15.

For 2013, Petronas paid a dividend of RM27 billion, which was also lower than the RM28 billion paid last year. Between 2009 and 2011, it paid a dividend of RM30 billion each year.

Petronas saw its net profit for 1QFY15 decline to RM11.4 billion from RM18.8 billion a year ago. Revenue declined 21% to RM66.2 billion for 1QFY15, from RM84 billion a year ago.

Compared with 4QFY14, Petronas posted a net loss of RM7.3 billion due to impairment provisions for the decline in asset values due to lower crude oil prices.

Wan Zulkiflee noted that Petronas recognised a savings of RM200 million from its contract negotiations with contractors in 1QFY15. The savings figure is expected to increase further as the year progresses.

Assuming that the national oil firm is able to achieve a 10% quarter-on-quarter net profit growth as its cost saving increases, Petronas’ full-year net profit would be RM52.5 billion for FY15 ending Dec 31, 2015. The RM26 billion dividend payment would be half of its full-year earnings — a rather high payout ratio.

The 11th Malaysia Plan states that the government is targeting oil revenue to contribute only 15.5% by 2020. The report said the government reduced its dependency on oil-related revenues by 29.7% in 2014, compared with 31.2% in 2013.

This reminds the public Petronas’ earlier proposal for setting a ceiling on its dividend payout ratio at 30%. Perhaps such a dividend policy would help to discipline the government on reducing its dependency on oil revenue — a factor that is seen to be posing threat to the domestic economy currently.

This article first appeared in The Edge Financial Daily, on May 25, 2015.