Abu Dhabi National Energy Company (TAQA), one of the largest listed integrated utilities in Europe, Middle East and Africa, reported a net income of AED13.5 billion ($3.68 billion) for the first half of 2023, an increase of AED9.2 billion, mainly driven by a one-off gain of AED10.8 billion resulting from the acquisition of a 5% shareholding in Adnoc Gas.
This was in part offset by a one-off AED1.2 billion deferred tax liability associated with the introduction of UAE corporate income tax from January 1, 2024. Net income excluding these one-off items was AED3.9 billion, 9% lower than the prior period, mainly due to lower contribution from the Oil & Gas segment.
TAQA’s performance was driven by strong and stable returns from its long-term contracted utilities business while it has remained focused on delivering its growth strategy, the company said.
Financial highlights:
• Group revenues of AED26.8 billion, 5% higher than the prior-year period, primarily due to higher pass-through bulk supply tariffs and transmission use of system within the Transmission and Distribution segment.
• Adjusted EBITDA was AED10.5 billion, down 7%. This fall was led by a decline in contribution from the Oil & Gas segment on the back of lower realised oil and gas prices and reduced production.
• Capital expenditure was AED2.1 billion, 17% higher than the prior year as project execution picked up pace in the Transmission & Distribution segment.
• Free cash flow generation was AED6.4 billion, 23% lower compared to the previous year. The decline was mainly driven by a lower contribution from the Oil & Gas segment.
• Gross debt was AED61.7 billion, unchanged on the amount outstanding at the end of 2022.
Operational highlights:
• Generation global commercial availability was 98.7%, compared to 97.5% in the prior year, with the UAE fleet performance in particular contributing to the increase.
• Transmission network availability for power and water was 98.2%, compared to 98.4%, marginally lower versus the prior-year period.
• Oil & Gas average production volumes decreased to 117,000 barrels of oil equivalent per day (boepd), a decrease of 6% compared to 2022. This decrease is mainly due to the shutdown of operations in Iraq and the natural decline in production of late-life UK assets.
Strategic highlights:
One of the most significant highlights for TAQA’s growth story is that it has announced entering into definitive agreements to acquire Sustainable Water Solutions Holding Company (SWS Holding). SWS Holding will add approximately AED16 billion to TAQA’s existing asset value and is highly complementary to TAQA’s existing portfolio, creating a vertically integrated player adding strong capabilities in high-quality water treatment solutions to the company’s expertise. It also operates under the same regulatory controls set by the Abu Dhabi Department of Energy (DoE), which governs TAQA’s transmission and distribution assets in the UAE, TAQA said.
The Generation business line had a productive first half of 2023, underscored by its steady growth and expansion in the UAE and abroad. In the second quarter, the company announced the financial closing for the Mirfa 2 Reverse Osmosis Desalination Plant (M2 RO). TAQA is taking a leading stake in the project company holding a 60% share, and, delivering on its ambitions to expand its operations and maintenance (O&M) capabilities, TAQA will also take a 40% stake in the O&M company for the project. The plant will have a capacity of 120 million imperial gallons per day (MIGD) of potable water and will use highly efficient RO technology, a critical part of TAQA’s ESG strategy to reduce its emissions by 2030 and its growth strategy to significantly increase the share of RO in its portfolio.
Delivering on its promises to add up to 15 GW of power capacity internationally, TAQA announced a strategic partnership with the Government of Uzbekistan to explore opportunities for investment in the country’s power sector. These opportunities will include new and existing plants as well as associated infrastructure. As part of the implementation agreement, TAQA is looking to develop a greenfield 1.5 GW gas-fired power plant, an additional 3 GW of capacity in other gas-fired power plants and transmission and distribution infrastructure. The 1.5 GW greenfield project would be located close to the Talimarjan power complex where TAQA has already announced an investment into privatising two gas-fired power plants.
In the Transmission and Distribution (T&D) business line, TAQA and Adnoc announced a AED8.8 billion strategic project which will provide sustainable water for Adnoc’s onshore operations. TAQA and Adnoc will each hold a 25.5% stake in the project, which will be a centralised seawater treatment facility and transportation network for Adnoc’s onshore operations and will deliver 110 MIGD of nano-filtered seawater.
Mohamed Hassan Alsuwaidi, Chairman of TAQA, commented: “Through its strategic growth during the first half of 2023, TAQA continues to deliver value for its stakeholders. The company delivered a strong and consistent financial performance, maintained its investment grade credit rating and ensured good returns for its shareholders through its dividend policy. Demonstrating its commitment to continued growth, the Company announced the expansion of its portfolio through its plan to acquire SWS Holding. This transaction will broaden the scope of TAQA’s activity in the regulated utility business by becoming a fully integrated water and wastewater treatment provider. TAQA has also grown both domestically and internationally in 2023, as well as in the renewable energy sector where it has exceeded its 2030 target of having 30% of its generation portfolio coming from renewable sources through the growth of Masdar. As such, TAQA continues to showcase the evolution and growth of the utilities sector, underpinned by its strong ESG commitments.”
Jasim Husain Thabet, TAQA’s Group Chief Executive Officer and Managing Director, commented: “TAQA’s steady performance in the first six months of 2023 demonstrates the Company’s firm commitment to delivering on its promises and growth agenda which is underpinned by the strength of our balance sheet. As a low carbon power and water champion, we have delivered on our growth ambitions in the first half of 2023 both inside the UAE and abroad. Locally, we have reached financial close on the Mirfa 2 RO plant which will be another utility-scale seawater desalination plant using the low-carbon and highly efficient reverse osmosis technology. We announced a nano-filtered sustainable water project alongside ADNOC to support their onshore operations and importantly, we announced that we have signed agreements to acquire SWS Holding. Together, these milestones firmly cement TAQA’s position as a regional integrated utilities champion and particularly showcase our water expertise.
“Internationally, we strengthened our position in Uzbekistan where we announced a strategic partnership with the Government of Uzbekistan for greenfield and existing gas-fired power generation projects as well as transmission and distribution investment opportunities. We also announced an investment into Xlinks to develop the early-stage Morocco-UK power project, which is intended to play a critical role in decarbonisation and energy security in the United Kingdom. Importantly, as TAQA continues to expand its footprint locally and internationally, we are delivering value for our shareholders whilst ensuring safe, sustainable, and secure power and water for the communities we serve around the world.” – TradeArabia News Service
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