Tim Gosling in Prague -
Seeking revenue to help with its fiscal consolidation drive, Poland's government forced through elevated dividend payouts from state-controlled giants PGE and PZU on May 30. Local media reports copper miner KGHM is next on the list.
Treasury Ministry representatives pushed through a 75% payout from 2011 profit at utility PGE - in which it holds a 61.88% stake - 40% above management's recommendation, for a total of PLN3.42bn (€778m). As the largest shareholder in insurer PZU with 35%, it managed to raise the dividend by 10% for a payout of PLN1.94bn.
However, it failed to eke cash out of the country's biggest oil refiner PKN Orlen, with shareholders approving management's proposal that it retain profits for reinvestment. Promising that the company will start paying dividends at some point, according to Reuters, CEO Jacek Krawiec told shareholders: "In the light of investment challenges mainly in the energy sector and in the shale gas field, the company cannot afford to pay out a dividend yet."
Overall, the government has set a target of PLN8bn of revenue from dividends in 2012 as it tries to squeeze the budget deficit to below the EU's 3% threshold. However, with plenty of scope for other revenue schemes - the PLN10bn privatisation programme for instance - to fall short this year, it is clearly pushing to collect as much as possible.
As PKN's reaction illustrates, this puts extra pressure on companies that the Treasury is also encouraging to make huge investments to lead the government's drive for greater energy independence. PGE is not only involved in the dash to develop Poland's shale gas resources, but is charged with giving the country nuclear power by 2020.
Krzysztof Kilian, CEO of PGE, expressed frustration at Warsaw's demands after the annual general meeting, reports Reuters, claiming that the higher dividend will put a final end to the company's troubled PLN7.5bn bid to take over of state-owned peer Energa. Calling the acquisition "undoable" now, Killian complained: "With this move, the ministry decided for us what we should do."
However, Treasury Minister Mikolaj Budzanowski is unlikely to let such resistance deter him. He has already said earlier this year that he expects a higher payout from KGHM - in which the government is also the largest shareholder with a 31.79% stake - than management has guided for. Parkiet reported on May 30 that the copper miner has proposed a dividend totaling PLN3.4bn, or PLN17 per share, but that the Treasury is pushing for PLN4.8bn.
The copper miner's dividend proposal was overruled by the state last year, reports Dow Jones, in a similar bid to secure extra financing for the budget, and KGHM eventually paid out PLN14.9 per share from 2010 profit, compared with a board proposal of PLN8.
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