The reason is that it had to go for two major deals, both on government order. Of acquiring a majority stake in Hindustan Petroleum Corporation (HPCL) and Gujarat State Petroleum Corporation’s (GSPC’s) KG basin gas block.

According to multiple sources, this would mean a cut of about 17 per cent on the dividend collected from petroleum companies, to Rs 145 billion in 2017-18 from Rs 175 billion in 2016-17.

“ONGC has informed the finance ministry that it is not in a position to pay higher dividend and might only be able to maintain last year’s payout ratio,” said a source. Based on this, the government had agreed to restrict the dividend payout to 45 per cent of the company’s net profit.

In this financial year, ONGC had completed the acquisition of an 80 per cent stake in GSPC’s KG basin gas block for Rs 77.4 billion. In January, it bought a 51.1 per cent government stake in HPCL for about Rs 369 billion.

Last year, the government had demanded higher dividend from its three oil marketing companies (OMCs) - Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and HPCL. The reason given was that their earnings and profit had risen in the first half of the financial year.

“This year, the average has been kept between 40 and 60 per cent for petroleum sector companies.

IOC’s share comes to around Rs 55 billion and that of ONGC at Rs 52 billion. These numbers include the final dividend of last year and interim dividend of this one,” said a government official, on condition of anonymity.

During 2016-17, higher dividends from cash-rich public sector undertakings had provided the exchequer a fiscal cushion. Petroleum companies saw a 71.3 per cent rise in dividend to Rs 175 billion.

The net profit of the government-owned exploration and production companies — ONGC, Oil India, and GAIL (India) — together dropped around one per cent during the first half of the current financial year. That of the three OMCs dropped 23 per cent from Rs 181.1 billion during the first half of last year to Rs 140 billion during the same time this year.