Page 11 - FSUOGM Week 37 2019

FSUOGM POLICY FSUOGM
Finance Ministry keeps fighting to get dividends from state firms
RUSSIA
Gazprom and Rosneft have been actively resisting the ministry.
RUSSIA’SFinanceMinistrycontinuestofightto collect 50% of profits as a dividend payout from the state owned enterprises (SEOs), preparing a decree that would target subsidiaries of state holdings, Interfax reported on September 12.
As reported by bne IntelliNews, Finance Ministry succeeded in forcing the 50% of IFRS net profit dividend payout ratio on almost all the country’s largest corporations, such as Rosneft, Transneft, state-controlled banks Sberbank and VTB.
Now, reportedly, the Finance Ministry will target the subsidiaries of state holdings that pay their mother structures less than the 50% target.
One of the examples of such holdings is Rosneftegaz (aka Rosneftegas), controlled by the influential head of Rosneft Igor Sechin. The holding controls the state’s shares in such majors as Gazprom, Rosneft, and Inter RAO, and has been actively resisting the Ministry of Finance in the fight for dividends.
The ministry is trying to raise new revenues to pay for president Vladimir Putin’s 12 national projects that will cost an estimated RUB27 tril- lion ($42bn), but analysts estimate the ministry
onlyhas60%ofthefundingcoveredinthenext years and needs to find new sources of income to make up the shortfall.
Rosneftegaz repeatedly dodged dividend payouts arguing the need to support mas- sive investment programmes, such as Zvezda shipyard.
“Inter RAO [utility holding] may be best positioned for dividend hike,” BCS Global Mar- kets commented on September 13, seeing the news as positive.
“The proposal, if adopted, may increase pay- outs for Gazprom’s generating assets and some MRSKs [Mosenergo] who are still paying less than 50% of net income. We think that the pro- posal also refers to InterRAO (controlled by state holding Rosneftegaz) and may push the com- pany to pay higher dividends next year,” BCS GM argues.
Inter RAO has a “solid cash pile of RUB176bn, sustainable 23% free cash flow (FCF) yield, no massive capital expenditures (CapEx) planned and a current 25% payout ratio – one of the smallestacrossmajorindustryplayers,”theana- lysts estimate. ™
Finance Ministry could extend additional tax for O&G sector
RUSSIA
Russia wants to compensate for tax cuts given to Rosneft.
RUSSIA’S Finance Ministry has proposed main- taining the surcharge in the mineral extraction tax (MET) paid by natural gas giant Gazprom, as well as an additional component in MET for crude oil, RBC and Vedomosti daily reported citing unnamed government sources.
The announcement is in line with previous reports that the Finance Ministry intends to compensate RUB600bn ($9bn) worth of tax cuts granted to state-controlled Rosneft by increasing the tax burden on all of the oil and gas industry.
“Under the current legislation, Gazprom’s MET surcharge co-efficient of 1.44 and the addi- tional crude oil MET component of RUB428 per tonne are approved only until the end of 2021,” Sberbank CIB noted on September 11.
Vedomosti reported that the ministry saw this additional taxation as an appropriate source of financing for the National Projects infrastruc- ture spending.
Sberbank CIB had already warned previously that the MET surcharge for Gazprom could be extended in the long term despite the promised improvement in the company’s dividend policy, considering this as compensation for the numer- ous tax breaks the company receives.
The analysts estimated that the changes would generate about RUB140bn ($2.3bn) in additional revenues for the government.
However, the additional MET for crude oil “could come as a negative surprise,” Sber- bank warned. But together with a “few con- siderable benefits for the oil sector that are currently being discussed, including an MET deduction for Rosneft and Gazprom Neft’s Priobskoye field (RUB60bn annually) and 30% investment co-efficient for the recov- erable excise [on downstream],” the total positive effect on the sector could still be RUB250bn-RUB300bn. ™
Week 37 18•September•2019 w w w . N E W S B A S E . c o m P11