Petronas May Pay RM48 Billion In Dividends This Year, But Rising Subsidy Costs Could Swallow The Gains

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Petronas contributed RM32 billion in dividends to the government in 2025, the highest among all payers, according to the Auditor-General’s Report.

The report was released on Monday (5 October).

The federal government received RM39.547 billion in investment dividends in 2025, up 1.4% from the previous year.

Bank Negara Malaysia’s dividend rose by RM2.4 billion, from RM2.85 billion in 2024 to RM5.25 billion in 2025.

Petronas said on 27 February that it would pay RM20 billion to the government in 2026.

BIMB Securities said that figure could rise to RM48 billion, assuming Brent crude averages US$95 a barrel. It made the projection in a Budget 2027 preview note on 2 October.

Brent has averaged between US$94 and US$98 a barrel over the past three months amid tensions in the Middle East. It was trading at around US$102.30 on 2 Oct.

BIMB said the fuel subsidy bill could reach RM50 billion in 2026. The figure stood at RM30 billion in 2025.

The research house said Petronas’ capital allocation could come under pressure if the government seeks larger dividends to offset higher subsidy costs.

It said this could raise questions over spending on upstream activities, gas infrastructure and energy-transition initiatives.

Petronas’ cash generation through its listed subsidiaries could also draw greater attention, BIMB added.

BIMB expects Petronas’ dividend to moderate to RM32 billion in 2027 and RM25 billion in 2028.

It projects Brent to ease to US$85 a barrel in 2027 and US$75 a barrel in 2028.

BIMB said higher oil prices may provide only a limited boost to Malaysia’s fiscal position.

Refining margins, or crack spreads, have climbed to more than US$60 a barrel, it said. Wider margins and resilient fuel demand push up the cost of fuel subsidies.

Because crude and refined product prices are diverging, subsidy spending could rise faster than petroleum-related revenue, according to BIMB.

“This could potentially constrain [the government’s] efforts to accelerate fiscal consolidation,” it said.

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