UAE utility firm TAQA sets up green finance framework

TAQA, also known as Abu Dhabi National Energy Company, is setting up a green finance framework for the issuance of green bonds, Sukuks, loans and other debt instruments to contribute to the utility firm’s ESG targets and long-term net-zero goal.

The Abu Dhabi-listed firm said proceeds from the issuances will be used to finance eligible green projects including renewable energy, energy efficiency, sustainable water and wastewater management as well as clean transportation, terrestrial and aquatic biodiversity.

“TAQA’s Green Finance Framework is an important mechanism to help us finance the journey towards achieving our environmental, social, and governance (ESG) goals, as a low carbon power and water champion,” said Jasim Husain Thabet, TAQA’s Group CEO and managing director.

The utility company said its green finance framework is aligned with the global best practice set out under the four core components of the Green Bond Principles 2021 that was published by the International Capital Market Association.

TAQA just launched a new Green Finance Framework for the issuance of green bonds, sukuks, loans and other debt instruments with the allocation of proceeds going to eligible green projects. pic.twitter.com/YT7v9ehAsW

— TAQA (@TAQAGroup) April 12, 2023

The framework was given a sustainability quality score of SQS2 (very good). The score is the second highest score under Moody’s Second Party Opinion (SPO) scoring framework, which means it demonstrates a significant contribution to sustainability.

TAQA unveiled its 2030 ESG Strategy in October 2022 with interim greenhouse gas emissions reduction goals of 25 per cent of scope 1 and 2 emissions and a 33 per cent reduction of UAE portfolio emissions, with 2019 as the baseline.

The sustainability strategy covers the company’s interim greenhouse gas emissions reduction goals and is a credible step towards achieving its net-zero ambitions by 2050.

“Our emission reduction targets are backed by a business plan and credible green projects that will see us play a key role in decarbonising the power and water sector as well as other industries in the UAE and around the world,” Thabet added.

The company aims to make renewables 30 per cent of its share of generation by that date, which it said had been accelerated by its acquisition of a 43 per cent stake in the renewables business of fellow Abu Dhabi-based company Masdar.

Read: Abu Dhabi’s ADNOC, TAQA and Mubadala complete deal to acquire Masdar stakes

Citi, Standard Chartered Bank, MUFG and HSBC are joint sustainability structuring banks for the green finance framework, with First Abu Dhabi Bank as sustainability finance framework advisor, TAQA said in a statement.

TAQA’s 2022 performance

Meanwhile, TAQA’s annual revenues surged 10.3 per cent to $13.6bn (Dhs50bn), driven by higher oil prices that averaged nearly $100 a barrel in 2022. TAQA reported a full-year net income of Dhs8 bn, an increase of Dhs2bn, which was boosted by the company’s oil and gas segment and lower depreciation expense supporting bottom-line growth.

Shareholders in the company approved a special dividend of 2.1 fils per share for FY2022 bringing total dividends to 5.1 fils.

The utility company said its capital expenditure dropped 20.1 per cent year-on-year to Dhs3.8bn in 2022 while free cash flow generation remained strong for the year at Dhs13.8bn, albeit 22.3 per cent lower compared to a year earlier due to the investment in Masdar.

TAQA made significant investments of Dhs4.5bn in 2022, which relates to the acquisition of a stake in the Abu Dhabi clean energy company and the project to power and decarbonise ADNOC Group’s offshore production operations. TAQA and ADNOC closed their $3.8bn strategic project to decarbonise Abu Dhabi oil major’s offshore production operations.

Read: ADNOC, Taqa close $3.8bn deal to decarbonise offshore operations

Similarly, the utility giant invested in Masdar together with ADNOC and Mubadala Investment Company, a deal that was closed in December 2022. TAQA holds a 43 per cent stake in the company, Mubadala retained its 33 per cent shareholding and ADNOC holds the remaining 24 per cent.