Creating value: Abu Dhabi's Taqa outlines growth, investment strategy

The energy giant will selectively seek growth opportunities across the UAE and internationally

Image used for illustrative purpose. TAQA's core investments drive nine month 2019 profits.

Image used for illustrative purpose. TAQA's core investments drive nine month 2019 profits.

TAQA / Handout via Zawya

Abu Dhabi National Energy Company (Taqa) is clearly focused on serving the electricity and water needs of its home market, while driving the clean power and water agenda of the emirate and broader UAE.

In a transformation strategy report, posted on the Abu Dhabi Securities Exchange website Taqa said it will selectively seek growth opportunities across the UAE and internationally following its asset swap deal with state-owned ADPower.

The new company with assets worth 200 billion dirhams ($54.46 billion) will be one of the largest listed companies in the UAE by market capitalization and among the top 10 utilities across Europe, the Middle East and Africa by regulated asset base.

"In the UAE, we will assess opportunities across the generation and transmission components of the value chain to meet increased demand for power and water, and to support the national energy strategy’s ambition to significantly increase the share of renewables within the country’s energy mix. Internationally, we will follow a disciplined approach and investment assessment framework, focusing on select opportunities with attractive risk-adjusted returns," the report said. 

"We will assess opportunities for largescale projects that fit our core competencies, including in markets where we have an existing presence that builds on our experience of specific investment and country risks, or in new markets through the establishment of new partnerships," it added. 

Taqa will continue to improve operating efficiencies within the oil and gas business line to maximize short-term value while seeking long-term strategic solutions.

"With our substantial new scale in the utilities space and further growth within this segment, our existing international oil and gas assets will become a smaller share of the new Taqa. This will significantly increase our resilience to commodity price volatility," the report noted. 

Creating value for stakeholders

The new Taqa will benefit from a significantly stronger financial profile backed by a de-leveraged capital structure and a higher share of stable and predictable cash flows from regulated and contracted assets.

"The company will take a proactive and disciplined approach to financial management focused on maintaining healthy access to global capital markets and bank lending channels. To that end, we will commit to maintaining a solid investment grade credit rating on a standalone basis," the strategy report stated.

Taqa said it will strengthen its financial position through a robust capital allocation framework and focusing on operational excellence across every aspect of the organization and all operations.

The energy giant currently has 23 GW of power generation capacity globally and 916 imperial gallons per day (MIGD) of water desalination capacity, of which 1.4 GW are from renewable sources. It also has a further 4.4 GW and 200 MIGD under development, including 2 GW from renewable sources.

Its assets across the UAE include 12 power and water generation plants in operation. Besides international assets, Taqa also owns all of Abu Dhabi’s power and water transmission and distribution companies.

(Reporting by Seban Scaria; editing by Daniel Luiz)



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