Saudi Arabia’s majority-owned state-owned firm, Saudi Aramco, is paying shareholders $19.5 billion in dividends in the second quarter of 2023, an amount higher than the size of Nigeria’s 2023 budget, indicating how a well-run oil company can provide a dollar supply to an economy.
This is even remarkable considering that the company’s profit fell by nearly 40 percent from the same period last year amid a decline in hydrocarbon prices.
Aramo reaffirmed its first-quarter base dividend of $19.5 billion, paid in the second quarter, and declared a second-quarter dividend of $19.5 billion, to be delivered in the third quarter.
This is not the same case for the NNPCL. The last time the state-owned company published its annual financial reports was in 2019, and the monthly report was released in August last year.
Aramco also said it intends to distribute performance-linked dividends over six quarters, starting with a $9.9 billion distribution in the third quarter.
“Our plan to maintain a sustainable and progressive dividend for our shareholders remains intact,” Amin Nasser, Aramco’s CEO told the media during a company earnings call.
The Saudi state oil giant $30 billion in net profit for the second quarter. The second-quarter profit nevertheless came slightly above analyst expectations near $29.8 billion in an Aramco-supplied poll.
In a filing to the Saudi stock exchange, known as Tadawul, the company said the substantive decline was due to lower crude oil prices and weakening refining and chemicals margins.
“Despite the economic headwinds, we see signals that global demand remains resilient, supported by an ongoing recovery in the aviation sector,” Nasser said.
This quarter’s result “is still a strong financial position. Yes, it’s not as astonishing as the results that we saw last year – but this is aligned with the overall industry trend,” Carole Nakhle, CEO of Crystol Energy, told CNBC’s “Capital Connection”.
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The net income figure was a 38percent decline from the previous year’s second-quarter earnings, which had hit a jaw-dropping net income of $48.4 billion. At the time, the second-quarter 2022 result was up 90 percent on the year, on the back of the energy price surge triggered by Russia’s war in Ukraine.
For long-suffering Nigerians who have seen it all in the form of rising inflation, two recessions, and an unemployment rate at the highest levels on record, they would be wishing they are in Saudi Arabia’s shoes with the higher dividend from its state-owned oil corporation.
The Nigerian government is looking for ways to attract dollars into the market in order to stabilize after the Central Bank of Nigeria (CBN) on June 14 floated the naira in a marked departure from years of controlling the rate, with banks now allowed to trade FX at market rates- a move that has been lauded as the critical first step in fixing the country’s broken FX market.
“The CBN should position itself for periodic intervention in the forex market, as and when necessary, to stabilize the exchange rate and prevent volatility,” Muda Yusuf, an economist and CEO of the Centre for the Promotion of Private Enterprise said.
“This should happen not by fixing the rate, but by boosting supply to the extent that the reserves can support,” Yusuf said.
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