The Finance Ministry has decided to close allowing Gazprom to reduce dividends loophole

As told to “Vedomosti”, the representative of the Ministry of Finance, the Ministry has developed and sent for approval a draft order, according to which introduces a perpetual rule for the payment of state-owned companies as dividends at least 50% of IFRS net income. This figure was increased from 25% to 50% in the past year, and now the Finance Ministry wants to make it perpetual, to also exclude the requirement to “take into account the investment programmes of the companies.” It is through this norm in the past year, Gazprom was able to qualify for reduced dividends.

According to calculations of the Ministry of Finance, consulted by Vedomosti, the difference between 25 and 50% will increase the budget by 200 billion, 225 billion and 250 billion rubles in the years 2017-2019.

The main disagreement of the Ministry of Finance and Minekonomrazvitija lies in the approach to the “loophole” with the companies ‘ investment programmes, the newspaper notes. “We believe that the investment projects of companies with state participation should be considered as separate projects, which must be calculated net present value (NPV) and provided a positive internal rate of return (IRR) in terms of market funding,” — said “Vedomosti” representative of the Ministry of Finance.

The representative of the MAYOR, in turn, told the newspaper that the Ministry of economic development generally supports the project, if the Ministry of Finance will present a financial and economic substantiation of expediency of the direction of such dividends, given the analysis of the impact of this approach on long-term development and investment programmes.

According to two Federal officials, are quoted by “Vedomosti”, September 6, the Ministry of Finance and economic development Ministry needs to finalize the wording, and if the MAYOR is against it, the document, the government will have to make the difference.

In 2015, “Gazprom” has paid a reduced dividend. The government has prepared a Directive according to which the company must pay 50% of consolidated net profit. However, the Ministry of economic development halve this amount to 175 billion rubles, which was offered a management “Gazprom”. The company received relief due to the large investment and increase the tax burden this year, said the head of the MAYOR Alexei Ulyukayev. As a result, “Gazprom” has directed on dividends 186,8 billion rubles — more than 50% of adjusted net profit under RAS, but less than 24% according to IFRS.