- This content was produced in Russia where the law restricts coverage of Russian military operations in Ukraine.
MOSCOW, June 30 (Reuters) - Russian gas giant Gazprom has decided not to pay dividends on last year's results, the first time it will not pay out since 1998, sending its shares plunging 27%.
"The shareholders decided that in the current situation it is not advisable to pay dividends based on the 2021 results," Deputy CEO Famil Sadygov said.
He added that Gazprom would rather focus on Russian regional gasification, preparation for the heating season and paying increased taxes.
Gazprom shares plunged by more than 27% on the decision, which reversed a board recommendation to pay a dividend of 52.53 roubles per share in what would have been its biggest payout.
Gazprom plans to spend 526 billion roubles ($10 billion) by 2025 to increase Russia's gasification from its current level of 72%.
Lawmakers are also discussing imposing a higher mineral extraction tax on the company as the government boosts social payments.
"This is a disaster for Gazprom shares, as the company's only investment appeal was high dividends. The decision is also likely partly linked to the finance ministry's willingness to increase... budget revenue," Tinkoff Investments analysts said.
Gazprom's decision comes as the Group of Seven economic powers looks to cap the price of Russian oil and gas as a way to prevent Moscow profiting from its actions in Ukraine, which have led to a sharp rise in energy prices.
Russian gas flows to Europe via Ukraine and the Nord Stream 1 pipeline have also fallen.
In its statement on Thursday, Gazprom did not mention either the G7 proposals to cap gas prices or the reduced flows to Europe, both of which threaten to cut its revenue and potentially its tax payments as a result.
($1 = 52.5000 roubles)
Reporting by Reuters; editing by Jason Neely
Source: Reuters