Gazprom to seek exemption on new dividend rule to aid VEB

Gazprom PJSC is asking the Russian government for a waiver from a new rule on dividends because the natural gas supplier may need to preserve cash to help bail out the state development bank, according to an official with knowledge of the matter.The energy company has asked the state to allow it to pay out less than 50% of its international-standard profit in dividends, two officials said, asking not to be named as the information isn’t public. Gazprom said it may need the cash to buy its own shares back from the state lender, Vnesheconombank, and the state may support its request, according to one of the people.The state has been considering a rescue plan for Vnesheconombank, or VEB, which was hit with US and European Union sanctions following Russia’s annexation of Crimea from Ukraine in 2014. One option is having Gazprom purchase 2.7% of its own shares from the state development lender, people with knowledge of the matter said last month.At the same time, Russia is pushing for more funds from state companies as a collapse in the price of crude oil, the biggest source of the budget revenue, deepens the recession and threatens to widen the deficit. While Gazprom faces a drop in gas-export earnings to the lowest in 12 years, its shares have rallied 15% since April 18, when the government signed the order on raising dividends at state companies.The state may support a proposal to let Gazprom pay out 50% of profit under Russian accounting standards instead of under international financial reporting standards, which could more than double the payout to a record high, the person said. Gazprom didn’t immediately comment.Gazprom’s management recommended an increase in the 2015 dividend by 2.8% to 7.4 roubles a share, which is equivalent to 50% of adjusted net based on Russian accounting standards, before the government announced the new rule. That compares with a possible 16.62 roubles a share based on international accounting standards. VEB’s stake in the gas producer had a value of 108bn roubles ($1.6bn), based on the most recent closing price in Moscow. Paying 50% of profit under Russian accounting standards, rather than international, may save Gazprom 218bn roubles, according to Bloomberg calculations. The state should decide on a dividend recommendation before the company’s board meets on May 19.VEB bought the Gazprom stake from Germany’s EON SE in 2010, when the gas producer’s market capitalisation was about $140bn. It has since fallen to about $60bn.Gazprom’s international-standard net income rose to 787bn roubles last year from 159bn roubles a year earlier, the state-controlled company said last week. When the government signed the dividend decree in April, some investors, including Vladimir Vedeneev from Raiffeisen Asset Management, doubted Gazprom’s ability to fulfil the plan without borrowing.