Taqa Swings to Third-Quarter Loss on Production Costs

Abu Dhabi National Energy Co., the government-run utility known as Taqa, swung to a loss in the third quarter as higher operating expenses and one-time costs offset gains in revenue.

Taqa reported a net loss of 288 million dirhams ($78 million) after earning 537 million dirhams a year earlier, it said in a statement today to the Abu Dhabi stock exchange. Sales rose 43 percent to 8.83 billion dirhams, the company said. Lower natural gas prices in North America limited revenue growth, Chief Executive Officer Carl Sheldon said on a conference call.

Taqa, owned 75 percent by the Abu Dhabi government, holds stakes in businesses generating power or producing oil and gas in the Middle East, the North Sea, India and North America. It borrowed in June to expand Morocco’s Jorf Lasfar power plant, the largest coal-fired facility in the Middle East, and plans to refinance debt due next year. The company is cutting planned capital expenditure in Canada by 30 percent to about $500 million this year, Sheldon said.

“Our third-quarter results were dominated by one-time non-cash items,” Chief Financial Officer Stephen Kersley said on the conference call. They included a charge of 272 million dirhams linked to U.K. tax changes and an impairment charge of 83 million dirhams related to investment in a U.S. infrastructure fund, he said.

The shares declined as much as 1.5 percent, or 2 fils, to 1.29 dirhams, before closing at 1.31 dirhams in Abu Dhabi.

Construction Costs

Revenue gains at Jorf Lasfar were mostly offset by construction costs for the addition of units there. Expenses rose to 6.72 billion dirhams from 3.72 billion dirhams, eroding profit, according to the company’s financial statements. The start of the Shuweihat S2 power plant in Abu Dhabi contributed to an 11 percent increase in operating costs from the same period last year.

The company, based in Abu Dhabi, capital of the United Arab Emirates, is seeking $2 billion to refinance a revolving credit facility maturing next year, it said in the statement. The effort “is proceeding well with strong interest from a large number of banks,” Taqa said.

Kersley said the loans will help Taqa maintain $4 billion in available credit lines. The company will also sell bonds to refinance debt maturing next year, he said, declining to comment on when a sale would take place.

“We like to go out at a time that’s convenient for us, not at the last minute,” Kersley said.

Taqa will evaluate opportunities in the Middle East and Africa, Sheldon said, adding that the company is interested in Iraq, where it already operates in that country’s northern Kurdish region. The company will continue to sell or close money-losing assets, particularly in North America, he said.

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