KARACHI – According to the latest fiscal accounts of the first half of FY11, dividend collection stood at a mere Rs 17 billion which is only 26 percent of the full year target. Furthermore, the said figure is 34 percent down from Rs 26 billion recorded in 1HFY10, primarily on account of the reduced payout from the energy sector. Trapped in the dilemma posed by the capitalist conundrum, the government is in a tight spot seeking to restrict the fiscal deficit to the targeted level of 5.3 percent of the GDP in FY11. The government has introduced new taxation and austerity measures to meet the ambitious target, but new challenges lies on the corner.
Amongst them is expected lower dividend collection from state owned enterprises (SOE) and others in FY11 primarily due to escalating circular debt.
According to the latest fiscal figures for 1HFY11, dividend collection stood at paltry Rs17 billion (26 percent of the full year target) as compared to Rs26 billion achieved in the same period last year. It is worth mentioning that since last few years the government actual dividend realisation remains lower than the annual targets. The government envisioned a dividend of Rs64 billion in federal budget FY11 (0.2 percent of the GDP), with major contribution coming from listed energy chain mainly led by OGDC and PPL. Cumulatively the two heavy-weights of the domestic energy chain were budgeted to contribute Rs36 billion (56 percent of the total target).
In total, the government has targeted Rs43 billion from listed firms including major heavy weights of energy sector (OGDC & PPL), PTCL and few major banks. Amongst the unlisted firms, major contributors are GHPL (Government Holding Private Limited) and Parco (Pak-Arab Refinery) both from energy sector. These two companies are budgeted to contribute 25% to the total target. With major contribution coming from energy SOEs, it is believed that the subdued dividend collection is due to the infamous circular debt, said Nauman Khan at Topline, adding that the debt, which is estimated to currently stand at Rs150 billion, has strained the liquidity position of the energy companies and thus affected their payouts
OGDC (largest contributor) has so far contributed only approximately Rs 10 billion, making the full year target of Rs 30 billion unlikely to be achieved, he said. This is primarily due to the circular debt which has forced the company to skip quarterly dividend in the second quarter of FY11 for the first time as its net receivables are standing more than Rs 73 billion. On the other hand, PPL has contributed around Rs3.4 billion to the government exchequer compared to full year target of Rs6.5 billion.
Dividend collection dries up, at Rs 17 billion
