Taqa aims to cut debt to 70% of capital

Abu Dhabi National Energy Company (Taqa) has succeeded in slightly cutting its debt over the past two years but it is planning to sharply reduce the level in the coming years, according to its managing director.

Abdulla Saif Al Nuaimi said the government-controlled Company is making progress in such a plan as it  lowered its debt-to-capital ratio from around 84 per cent at the end of 2008 to 81 per cent at the end of 2009.

“Financial management is a priority for 2010…Taqa is continuing to strengthen its balance sheet and improve the capital structure while maintaining prudent levels of liquidity,” he told Oxford Business Group.

“Taqa has a target debt-to-capital ratio of 70 per cent towards which Taqa is making good progress,” he added.
Taqa is among a handful of companies in the region that has reported a massive increase in its net earnings over the past months and a large part of its income has been generated from its oil and gas assets.

The Company’s net profits jumped by nearly142 per cent to Dh218 million in third quarter this year from Dh90m for the same period of 2009.

Its total earnings also soared by about 33 per cent to Dh5.2 billion in the third quarter from around Dh3.9 billion in the third quarter of 2009.

Its balance sheet showed the Firm’s nine-month profits leaped by nearly 154 per cent to Dh676 million from Dh266m in the same period last year while 9-month revenues swelled by 21 per cent to Dh15.11 billion.

“Taqa is an organization focused on exploiting the opportunities that exist for organic growth…we plan to do this through increased integration and asset optimization, having acquired more than $25 billion of assets across geographies and market segments,” Nuaimi said.

He said the 2008 global fiscal distress had demonstrated the benefits of having a diversified portfolio, balanced between stable, cash-generative assets in established markets and high-risk, high-reward interests in emerging markets.

“This provides a form of internal hedging and has enabled Taqa to withstand an unprecedented year of volatility and economic uncertainty by leveraging its power-generation operations,” he said.

“Taqa is also benefiting from falling costs, particularly in the upstream hydrocarbon sector, where accelerating costs almost matched the rise in oil prices in 2008…there was an inevitable lag between oil prices falling and the costs dropping but as Taqa embarks on drilling programmes in Britain and Canada, we are beginning to see the benefits.”

Taqa, which is 75 per cent owned by the Abu Dhabi government, was set up in June 2005 as a semi sovereign wealth fund for the emirate. Its paid up capital stood at Dh6.225 billion at the end of last September and the company is targeting an asset portfolio of $60 billion within 10 years.