Govt to post lower dividends from energy sector in 2019
12:14 PM
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The government is anticipating lower dividend payouts from two state holdings in the energy sector next year, namely Pertamina, which oversees oil and gas businesses, and state-mining firm Indonesia Asahan Aluminium (lnalum) because of lower profit projections and a corporate action plan.
The State-Owned Enterprises (SOE) Ministry initially targeted to book Rp 3.8 trillion (US$ 255.2 million) in dividends in 2019, comprising Rp 1.3 trillion from
Pertamina and its new gas subsidiary PGN, and Rp 1.5 trillion to Rp 2 trillion from inalum. The projection for 2019 will only reach half of the 2018 target of Rp 5.75 trillion.
Fajar Harry Sampurno, deputy for mining, strategic industries and media affairs at SOE Ministry, said that Pertamina was preparing to post lower profits in
2019 based on its current financial performance.
“The profits of Pertamina and PGN, especially the former, may decline significantly [next year],” he told lawmakers during ahearing at the House of Representatives’ Commission VI overseeing SOES in Jakarta recently
According to its data, Pertamina booked Rp 5 trillion in profit during the first six months of this year, or only 15 percent of its full-year target of Rp 32.7 trillion. The prognosis for its full-year net profit in 2018 was lower compared to the Rp 34 trillion Pertamina recorded in 2017. The year prior, it earned Rp 41.87 trillion in net profit, the highest figure in eight years.
lts dividend payout ratio has been declining each year to only 15 percent as targeted in 2018, from 36 percent four years ago. Despite anticipating lower
profit growth this year, Pertamina is trying to find solutions based on the current conditions. Speaking at the same occasion, Pertamina finance director Arief Budiman said the firm would soon revise its 2018 profit target as the price of crude oil had increased while the rupiah continued to weaken, both
of which could actually help boost its exports.
We are in the process of revising our 2018 profit target and considering [a higher] crude price, incoming disbursement of subsidy [for Solar gasoline at Rp 2,000 per liter] and other past [supporting] government policies that only took effect this year,” he said.
At the same time, lnalum, which is in charge of taking over a majority ownership in Freeport Indonesia (PTFI), has proposed to pay Rp 1 trillion in dividends
next year, 47 percent lower than Rp 1.9 trillion targeted this year. lnalum president director Budi Gunadi Sadikin, a former banker, said the lower dividend payment in 2019 was mainly due to the corporate action to purchase majority shares in PTFI at $ 3.85 billion, which would be funded by syndicated loans from foreign banks.
“The loan interest for the purchase of 51 percent of PTFI’s shares is estimated to be around Rp 3.5 trillion per year, which will be paid in full by 2019. In addition, Inalum also requires funding for other investments" he said.
However, Fajar said lnalum should set at least Rp 1.5 trillion to complement the lower dividend target in Pertamina next year. PTFI, operator of the world’s second-largest copper mine in Papua, is the local subsidiary of United States-based miner Free-port-McMoran Copper & Gold Inc. (FCX).
Aside from lowering its dividends, lnalum also plans to issue global bonds to ensure that the loan it will take to finance the deal on PTFI will not burden its finances. As of July, its debt-to equity ratio was 22 percent, or 4.7 percent higher from 21.2 percent seen in December 2017. Budi said another reason for the lower dividend target in 2019 was the need for funding for four mega projects by its subsidiaries, namely smelter development by Aneka Tambang in East Halmahera, steam power plant by Bukit Asam in South Sumatra, steel refinery by Timah and copper smelter by PTFI.
Jakarta Post, Pge-13, Monday, Sept 10, 2018
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