Abu Dhabi National Energy Company (Taqa) reported on Monday a nine per cent drop in first-quarter earnings to Dh4 billion due to a sharp fall in oil prices.
In a statement, the company said that the decline in revenues from Dh4.3 billion in the same 2019 period was the result of a 21 per cent drop in the price of oil and gas. Ebitda fell 18 per cent to Dh1.9 billion "reflecting weaker revenues as well as higher operating expenses within the oil and gas business."
"As a result of the significant and prolonged effects on oil demand due to Covid-19, and in line with peers, the company reduced its 2020 and 2021 oil price assumptions, requiring a write down of the group's carrying amounts of certain oil-specific assets with a post-tax, bottom-line impact of Dh1.5 billion," said the Abu Dhabi-based energy firm.
The loss attributable to Taqa's shareholders for the first quarter was Dh1.7 billion driven by the above-mentioned impairment charges, the statement said.
"Our results continue to demonstrate the value of a stable power and water business in a low and volatile commodity price environment," said Saeed Al Dhaheri, CEO of Taqa.
"Nonetheless, the advent of the Covid-19 pandemic has weakened demand across multiple sectors globally, impacting our results for the quarter, as for many others with exposure to the oil and gas sector. Liquidity as at quarter-end remained strong at Dh11.9 billion, including Dh2.6 billion in cash and cash equivalents and Dh9.3 billion of undrawn credit facilities. Despite the challenging start to the year, Taqa is looking ahead and is well positioned to continue benefiting from stable revenue streams," he said.
The transaction to transfer the majority of Abu Dhabi Power Corporation's (ADPower) water and electricity generation, transmission and distribution assets to Taqa, was approved earlier in April by Taqa's shareholders and remains scheduled to close in the third quarter of 2020.
"As we look to close the landmark transaction with ADPower in the upcoming weeks, Taqa will not only become a fully integrated utility, but will benefit from the financial strength to lead the UAE's power and water sector transformation," said Al Dhaheri.
Once the transaction completes, the diversified energy major will be a top-10 integrated utilities player in the region by regulated assets and one of the largest publicly listed companies in the UAE, based on market capitalisation.
Subsequent to the deal, Taqa's power generation capacity will increase by 4.9GW to 22.7GW, and contracted water capacity increases by around 59 MIGD to 968 MIGD. The group will serve more than one million customers in the UAE, with around 80,000 km of electricity transmission and 20,000 km of water pipelines.
Taqa said that it will generate recurring, stable income with more than 85 per cent of its revenues and Ebitda coming from regulated and long-term contracted businesses, supplemented by oil and gas assets. The group will have a stronger long-term capital structure, which is expected to enable sustainable dividend distributions to shareholders, as well as the financial firepower for new investment both to enhance efficiency and to expand through new ventures.
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