Adwea increases its stake in Taqa to 74%

ABU DHABI

Abu Dhabi Water and Electricity Authority (Adwea) has increased its stake in Abu Dhabi National Energy Company (Taqa) from 52.38 per cent to 74 per cent, a sign of continuous support from the main shareholder.

Adwea has bought the 21.67 per cent shareholding held by the Fund for the support of Farm Owners to take its share in the company to 74 per cent. “The change is a positive development because Adwea has always been an active shareholder,” a Taqa spokesperson told Gulf News by phone.

The development comes as the company reported a net loss of Dh19 billion for 2016, primarily on the back of Dh16.9 billion in post-tax impairment charges related to the company’s oil and gas assets.

Revenues of the company were also down by 17 per cent when compared to the previous year due to low oil prices.

To mitigate lower commodity prices, Taqa implemented a two-year transformation programme, which was completed in 2016, to cut costs and deliver total savings of Dh13.2 billion.

This included a capital expenditure reduction of Dh8.6 billion from 2014 till 2016, and over 1,000 jobs across the company’s global operations, reducing headcount by 25 per cent.

Mohammad Ali Yasin, head of NBAD Securities, said this is another case where the government of Abu Dhabi has stepped in to ensure that Abu Dhabi related entities do not get troubled or scratched by some mistakes of the previous management of certain public companies.

“All of these investments ensure that they are valued correctly in the books and there is no bleeding of losses as we go along.”

Taqa’s shares performed well on Sunday and Monday amid investor speculation the government will step in after the oil company reported huge losses for the year 2016.

Last year, 15 million square meters of land valued at Dh18.7 billion was transferred from Adwea to Taqa which is expected to generate significant cash for the company in the long term. “The asset transfer from our majority shareholder has been well received by our investors as it provides a greater opportunity for TAQA shareholders to realise long-term value from their investment,” Taqa spokesperson said.

“The transfer stabilises our balance sheet and allows us to optimise the Oil & Gas portfolio including possible non-core divestments.”