Oil and Natural Gas Corporation (ONGC) has given the government a dividend of ₹7,224 crore for the financial year 2023-24. ONGC is leading among oil and gas companies in contributing to the government’s revenue.
ONGC’s dividend is almost twice as much as Indian Oil Corporation’s dividend of ₹3,636 crore, almost three times Bharat Petroleum Corporation’s dividend of ₹2,413 crore, nearly four times GAIL’s dividend of ₹1,863 crore, and about ten times Oil India’s dividend of ₹737 crore.
These dividends are interim, and the final amount usually comes after the companies announce their annual earnings.
The high dividends are due to the companies making strong profits during the financial year. High prices of oil and gas have increased profits for producers, while a freeze on domestic fuel prices has boosted earnings for refiners. Natural gas marketers have also benefited from increased fuel consumption.
“ONGC strikes a balance between releasing dividends and generating internal resources to meet current shareholder expectations and fund future capital expenditure,” said ONGC chairman Arun Singh. The company expects its capital expenditure to almost double by the end of the decade.
Change in investor sentiment
In the past two years, global oil and gas companies have used their unusually high profits to reward shareholders with heavy dividends or share buybacks. This has changed investor sentiment towards these companies, which had struggled in the stock market before the Covid-19 pandemic.
For the nine months ending December 2023, ONGC reported a consolidated profit of ₹43,466 crore and paid a dividend of ₹12,266 crore. The government owns 59% of ONGC.
IOC has paid a total dividend of ₹7,061 crore to shareholders after earning a profit of ₹36,364 crore in the nine months. Coal India’s dividend of ₹12,634 crore, including ₹7,976 crore to the government, surpasses ONGC’s dividend this year.
Dividends from other sectors
NTPC, India’s top power producer, announced a dividend of ₹4,363 crore, including ₹2,230 crore to the government.
Power Grid Corporation paid a dividend of ₹7,906 crore, including ₹4,059 crore to the government, while Hindustan Aeronautics Ltd paid a dividend of ₹1,471 crore, with ₹1,054 crore going to the government. NMDC paid ₹1,685 crore in dividends, with ₹1,024 crore to the government.
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