Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
Fitch Ratings has reaffirmed Abu Dhabi National Energy Company’s (TAQA) long-term credit rating at ‘AA’ with a Stable Outlook, underscoring the company's robust financial profile and strategic importance to the Abu Dhabi economy.
The rating reflects TAQA’s classification as a government-related entity, with Fitch assuming “virtually certain” support from the Abu Dhabi government in all financial circumstances.
TAQA continues to enjoy the same sovereign rating as the government of Abu Dhabi, based on the expectation that its obligations would be fully supported if needed. Alongside this, Fitch Ratings has maintained TAQA’s standalone credit profile (SCP) at ‘bbb+’, recognising the company’s solid operational fundamentals.
“The standalone profile reflects TAQA's strong business fundamentals, which are supported by its dominant presence in Abu Dhabi and a substantial portion of regulated and quasi-regulated earnings. We expect higher capex in 2025-2028 to increase its funds from operations,” Fitch Ratings observed in its latest report.
The agency highlighted that regulated and quasi-regulated businesses contributed 51% and 34%, respectively, to TAQA’s 2024 EBITDA, underlining the company's stable revenue base. “It has a leading position in Abu Dhabi as a fully integrated utility,” the agency noted.
Fitch cited several factors that justify the continued strong rating for TAQA, a key player in the region’s energy infrastructure. “We see no effective substitutes for TAQA given its role in the energy system of Abu Dhabi. TAQA has a large share in power generation and water desalination, monopoly in the electricity and water transmission and distribution (T&D), and wastewater treatment,” the report stated.
Recent strategic investments have further reinforced TAQA’s position. The 2024 acquisition of Sustainable Water Solutions Holding Company (SWS) and an equity stake in Abu Dhabi Future Energy Company (Masdar) have bolstered the company's capabilities as a leading integrated utility. “A TAQA default could also affect the cost of funding for the sovereign, given its large size and activity on capital markets,” Fitch warned.
Fitch expects the regulatory framework governing electricity and water T&D in Abu Dhabi to remain stable and transparent, with effective cost-recovery mechanisms that compare favourably to other emerging markets. It also anticipates continued and timely subsidy payments from the state, supporting TAQA’s financial flexibility.
Looking ahead, Fitch forecasts that TAQA will receive increased earnings contributions from its associate companies over 2025–2028, amounting to Dh1 billion annually, with half of that expected from ADNOC Gas, in which TAQA holds a 5% stake. “We do not forecast any dividends from Masdar, given its ambitious growth plans and targets,” the agency added.
TAQA remains committed to Vision 2030, particularly in transmission, distribution, water, and power generation. Fitch estimates that Dh8 billion will be injected over 2025–2026, reinforcing TAQA’s long-term investment trajectory. “TAQA also plays an important role in achieving Abu Dhabi's energy targets of 2050, through its commitment to invest around Dh75 billion in 2021–2030, of which Dh26.7 billion were invested in 2021–2024,” Fitch said.
In summary, TAQA’s reaffirmed rating is anchored in its strong business profile, stable cash flows, supportive regulatory environment, and strategic position in Abu Dhabi’s utilities sector, backed by the near-certain support of the government.
ADQ, the sovereign wealth fund, holds over 90% stake in TAQA, which is listed on the Abu Dhabi Securities Exchange with market cap of Dh370 billion.
