TAQA Expands Global Footprint in Q1 of 2024

Abu Dhabi National Energy Company (TAQA), one of the largest listed integrated utilities in Europe, the Middle East and Africa (EMEA), on Wednesday said that the first quarter of 2024 marked yet another significant milestone for its commitment to expand its international footprint.

In a disclosure with Abu Dhabi Securities Exchange (ADX), TAQA said that it has joined forces with industry leaders Japan’s largest power company JERA and SATORP, a joint venture company owned by Saudi Aramco and TotalEnergies, committing to the development of a state-of-art power and steam cogeneration plant in Jubail, Saudi Arabia as well as being part of the consortium that won the Juranah project, to support water security in Makkah.

TAQA’s Group CEO and Managing Director Jasim Husain Thabet said that through the investments the company has made, they continued to pursue other aspects of their 2030 growth strategy and remains committed to their ambition of being a champion of low-carbon power and water.

Revenues

The company, while reporting its earnings for the period ending 31 March 2024, said that it has delivered a robust financial performance, bolstered by the recognition of contributions from Sustainable Water Solutions Holding Company PJSC (SWS Holding).

The Group revenues of $3.73 billion was 5.3% higher than the prior-year period, due to contribution from SWS Holding, which also increased adjusted EBITDA and net income. The adjusted EBITDA was $1.5 billion, 4.9% higher than the prior-year period.

However, the net income (TAQA’s share) stood at $570 million, a decrease of $2.59 billion, because of one-off items recognised in 2023. Net income, excluding these one-offs, increased by $27 million, 6.9% higher than the prior-year period.

The company’s capital expenditure was $460 million, 60.3% higher than prior year driven mainly by construction progress in the Mirfa 2 Reverse Osmosis (M2 RO) and Shuweihat 4 Reverse Osmosis (S4 RO) desalination projects.

Free cash flow generation was $82 million, $1.09 billion lower than the previous year due to increase investments into Masdar to finance investment in renewable energy projects, capital expenditure on the two abovwe mentioned RO projects, and working capital movements.

The gross debt was $17.02 billion, up from $16.8 billion at the end of 2023, reflecting project debt assumed on the acquisition of SWS Holding and investment in expanding TAQA’s desalination capacity with the development of the two RO projects which are underway.

Acquisitions

During 2023, TAQA agreed to acquire 100% of SWS Holding from Abu Dhabi Power Corporation, TAQA’s majority shareholder. SWS Holding, with its predictable earnings and large regulated asset base, is highly complementary with TAQA’s existing business.

Combining them will create a vertically integrated player with strong capabilities in delivering high-quality water treatment solutions as well as a shared commitment to operational efficiency and customer service excellence.

Whilst the majority of conditions relating to the transaction have been satisfied, certain procedural steps remain outstanding for legal completion to occur.

Under the terms of the transaction, the economic contributions from SWS Holding are to be assumed by TAQA from 1 January 2024 and are therefore reflected in its consolidated accounts for the first time.

TAQA, together with JERA announced that they entered into a Power and Steam Purchase Agreement with SATORP to develop a greenfield industrial steam and electricity cogeneration plant. The plant will produce electricity and steam for the Amiral petrochemical complex to be developed in Jubail in Saudi Arabia.

TAQA also announced its participation in the winning consortium to develop a $140 million Independent Strategic Water Reservoir project with a storage capacity of 2,000,000 cu m in Juranah (Makkah region).

The consortium, which also includes Vision International Investment Company (Vision Invest) and Gulf Investment Corporation (GIC), signed project agreements with the procurer Saudi Water Partnership Company (SWPC).

The Juranah ISWR-1 Project is the first of its kind in Saudi Arabia under a BOOT (Build, Own, Operate, Transfer) model, reflecting active private sector involvement in essential water infrastructure development.