Abu Dhabi National Energy Company (TAQA) announced its earnings for the first quarter of 2020 with Group revenues declining by 9 per cent to AED 4 billion as a result of the drop in oil and gas prices.
TAQA said in a statement that the drop in revenues was the result of a 21 per cent drop in the price of oil and gas sold by TAQA for the same period last year. EBITDA fell 18 per cent to AED 1.9 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 Group 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 AED 1.5 billion.
Despite the challenging start to the year, TAQA said it is looking ahead and is well positioned to continue benefiting from stable revenue streams. 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.
TAQA stated that once the transaction completes, TAQA will be a top-10 integrated utilities player in the EMEA region by regulated assets and one of the largest publicly listed companies in the UAE, based on market capitalisation.
“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, TAQA CEO. “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.
“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.”