Abu Dhabi National Energy Co (Taqa) said it would invest up to $1 billion in a joint venture to build power plants in India, where electricity demand outstrips supply by as much as 10 percent.
UAE-based Taqa’s venture with India’s Infrastructure Leasing & Financial Services Ltd. will add a total of up to 7,000 megawatts to generating capacity in Asia’s third-largest economy, Taqa chief executive Peter Barker-Homek said.
The power plants will be built in the next three to five years across India, where the government plans to invest 8 trillion rupees ($283 billion) by 2012 to add about 100,000 megawatts of power generating capacity.
“There will be up to $1 billion in equity from Taqa, and Infrastructure Leasing will invest alongside,” Barker-Homek said in an interview in Abu Dhabi.
“We will identify power-deficient states to build independent power plants in the coming months.”
Less than half of India’s 138.27 million rural homes have power. With economic growth surging, electricity demand in the country of 1 billion people exceeds supply by 10 percent during peak hours.
Infrastructure Leasing said in a joint statement that investments with state-controlled Taqa would include a 750 megawatt gas-based power project in Tripura state in northeastern India.
India was one of the countries Taqa cited when it announced in October it was planning to make energy acquisitions worth up to $3.5 billion in the next two years.
Taqa, which has controlling stakes in five power and water stations in Abu Dhabi, said it would buy Dutch gas exploration and production assets of BP for $694 million.
Gulf Arab companies are scouring the globe for investment opportunities after a tripling of oil prices since 2001 powered economic growth in the world’s top oil-exporting region.
Meanwhile, Taqa said it would invite banks before April to bid on lending it as much as +ACQ-1.5 billion to refinance debt, in what will be the second part of a +ACQ-9.5 billion borrowing programme.
Taqa will invite seven Gulf Arab and international banks to lend between +ACQ-700 million and +ACQ-1.5 billion to refinance the debt of one or two of its power-generating and water desalination units, Barker-Homek said.
Taqa, which controls six utility plants in the UAE with partners such as Britain’s International Power Plc and Suez SA, is raising +ACQ-6 billion to replace existing debt with cheaper loans and +ACQ-3.5 billion to finance foreign acquisitions and joint ventures.
+ACI-We want to build international businesses that last and help Abu Dhabi diversify,+ACI- said Barker-Homek.
Abu Dhabi, the largest member of the UAE federation, is using a windfall from a tripling in oil prices since 2001 to boost its foreign holdings, diversify its economy away from crude and cushion against a decline in prices.
State-run Mubadala Development Co last year bought stakes in companies such as sports car makers Ferrari and Spyker as part of the diversification programme by the emirate.
Taqa, which sold +ACQ-3.44 billion of bonds with a coupon of as low as 5.875 per cent, is seeking loans with a maturity of 15 to 20 years, Barker-Homek said. It may later sell bonds, or sukuk, that comply with an Islamic ban on charging interest, he said.
The company, which last year sold +ACQ-163.05 million of shares in an initial public offering, is in talks with several companies about acquiring stock and forming joint ventures and may conclude its first buyout by March, Barker-Homek said.
+ACI-We have been given a global remit to invest through the energy chain,+ACI- Barker-Homek said.
The company, which controls about 85 per cent of Abu Dhabi’s 8,200 megawatts of power-generating capacity, is considering buyouts, minority acquisitions and joint ventures in Europe, the Middle East, Africa and India, Barker-Homek said, declining to be more specific.
The 17-month-old firm is targeting investments in oil and gas production, pipelines, petroleum storage and power generation. That includes terminals that receive LNG, Barker-Homek said.
Taqa bought +ACQ-34 million of shares in Russian oil company Rosneft’s IPO in July and has invested +ACQ-200 million in an infrastructure fund managed by the Carlyle Group.
Barker-Homek said Taqa would hold onto its roughly 4.5 million shares in Rosneft, because there is still +ACI-a lot of upside+ACI-.
Rosneft raised +ACQ-10.4 billion in its IPO, at the time a record for Russia and the world’s fifth-biggest. It was Taqa’s first foreign purchase.
Taqa’s third-quarter profit plunged 90 per cent to 79.4 million dirhams (+ACQ-21.6 million) from the year-earlier period when funds from its IPO boosted earnings.
Profit from ordinary operations in the three months to September 30, excluding 602 million dirhams in interest income, fell 56 percent, figures posted on the Abu Dhabi stock market website showed.
Standard +ACY- Poor’s ratings company gave Taqa a corporate credit rating of A1. Moody’s Investors Service rated the dollar bonds and the Eurobonds Taqa sold at Aa3, fourth level from the top investment-grade rating.
