UAE’s TAQA reports AED15 bn net income for first nine months of 2023

Abu Dhabi National Energy Company (TAQA), which is among the largest integrated utilities in Europe, the Middle East, and Africa (EMEA), has released its earnings for the period ending on September 30, 2023. Alongside this announcement, TAQA has revealed revised growth targets aimed at expediting the development of new power and water generation assets, while continuing to invest in transmission and distribution infrastructure. The updated investment plan also sets a goal for a greater proportion of renewables in its portfolio by the year 2030.

Expanding on its growth strategy from 2021, TAQA has unveiled revised growth targets that aim to achieve 150 gigawatts (GW) of gross power generation by 2030, a significant increase from the previous target of 50 GW. In this revised plan, approximately 65 percent of TAQA’s generation capacity will come from renewable power sources, surpassing the previous commitment of 30 percent. This upgrade is largely attributed to TAQA’s prominent stake in Masdar’s renewable energy operations. Furthermore, Masdar’s clean generation capacity is projected to reach 100 GW by 2030 as an independent entity. In terms of net power generation capacity, TAQA is on track to reach 50 GW by 2030, a notable rise from its existing net capacity of 17 GW.

In addition, TAQA is intensifying its growth targets for water generation by aiming to enhance the Group’s water generation capacity to 1,300 million imperial gallons per day (MIGD). Two-thirds of this increased capacity will be derived from the employment of highly efficient and low-carbon reverse osmosis (RO) technology. Currently, TAQA possesses a desalination capacity of slightly over 1,180 MIGD.

Future projects

TAQA has outlined its plans to invest AED75 billion until 2030 in order to support the development of future projects, including the expansion of power and water capacity, as well as enhancing transmission and distribution networks based in the UAE. This investment amount encompasses the previously committed expenditure of AED40 billion, allocated between 2021 and 2030, specifically aimed at augmenting TAQA’s transmission and distribution networks within the UAE.

In addition, TAQA is actively pursuing opportunities for both organic and inorganic growth to expand its Transmission and Distribution business beyond the borders of the UAE.

Throughout the initial nine months of 2023, TAQA exhibited a robust financial performance, primarily propelled by strong and consistent returns from its long-term contracted utilities business. Meanwhile, the company has maintained its focus on executing its growth strategy.

Financial highlights 

• Group revenues remained steady at AED39.5 billion, unchanged compared to the same period in the previous year. This was due to higher pass-through bulk supply tariffs and transmission use of the system within the Transmission and Distribution segment, which offset the decline in Oil and Gas revenue.
• Adjusted EBITDA was AED15.3 billion, down 11 percent. This fall was led by a decline in contribution from the Oil and Gas segment on the back of lower realised oil and gas prices and reduced production.
• Net income (TAQA share) was AED15.0 billion, an increase of AED8.5 billion, driven by a one-off gain of AED10.8 billion recognised on the acquisition of a 5 percent shareholding in ADNOC Gas, in part offset by a one-off AED1.2 billion deferred tax liability associated with the introduction of UAE corporate income tax from 1 January 2024. Net income excluding these one-off items was AED5.4 billion, 17 percent lower than the prior period, mainly due to lower contribution from the Oil and Gas segment.
• Capital expenditure was AED3.3 billion, 3 percent higher than the prior year, as project execution picked up pace in the Transmission and Distribution segment.
• Free cash flow generated amounted to AED10.2 billion, reflecting a 20 percent decrease compared to the previous year. This decline can be attributed to a lower contribution from the Oil and Gas segment.
• Gross debt remained unchanged at AED61.7 billion, maintaining the same level as the outstanding amount at the end of 2022.

 Read more: TAQA’s unsecured notes oversubscribed, reaching $15 bn

Operational highlights

• Global commercial availability for generation reached 97.9 percent, representing a slight increase compared to the prior-year period when availability stood at 97.8 percent.
• Transmission network availability for power and water was 4 percent, marginally lower than the prior-year period (98.6 percent).
• Oil and gas average production volumes were 110.5 thousand barrels of oil equivalent per day (boepd), a decrease of 10 percent compared to 2022. This decrease is due to the enforced shutdown of operations in Iraq due to the closure of the export pipeline and the natural decline in production of late-life UK assets.
• TAQA’s efforts in ESG initiatives received further recognition, as multiple agencies have upgraded the company’s ESG rating, acknowledging its progress in this area.

Unwavering commitment

Jasim Husain Thabet, TAQA’s group chief executive officer and managing director, commented: “In the first nine months of 2023, TAQA remained unwavering in its commitment to creating long-term shareholder value, delivering a steady performance on the back of strong returns from the Group’s utility business despite headwinds caused by fluctuations in commodity prices and the enforced shutdown of our production in Iraq.”

“I am pleased to note that we have continued to deliver on TAQA’s growth agenda with project execution across the Transmission and Distribution segment, further supported by a pickup in regulated capital expenditure. During the third quarter of 2023, we reached financial close on a $2.2 billion (AED8.3 billion) sustainable water supply project in collaboration with ADNOC as TAQA continues to be a partner of choice for industrial players and their decarbonisation ambitions towards net zero. As a low-carbon power and water champion and in line with TAQA’s Green Finance Framework and ESG Strategy, we also completed the secondary listing of our dual-tranche bonds onto the ADX, including our first TAQA-issued green bond,” he noted.

Positive momentum

On TAQA’s revised growth targets, Thabet added: “We approach the year-end with positive momentum as TAQA continues to expand its footprint domestically and internationally in line with our revised growth targets. Our continued success and rapid expansion have made it imperative to align our targets to the evolving ambition of the business while maintaining our commitment to innovation and delivering on our promise to our stakeholders. TAQA is an excellent example of the energy transition in action as we turn ambition into tangible outcomes to support the UAE’s decarbonisation efforts. TAQA’s growth has laid the foundation for achieving sustainable growth, putting us on the path towards a low carbon future whilst maintaining attractive returns for our shareholders and helping to deliver energy security in the markets we serve.”

Dividend declaration

Following the approval of the financial results, TAQA’s Board of Directors announced the declaration of a third interim cash dividend for the year. The dividend amount is set at 0.65 fils per share, which is approximately AED731 million, aligning with the Company’s newly implemented dividend policy.

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