Acwa Power 2022 net profit doubles on lower impairment charges and higher income

Saudi company announces plans to develop a 1-gigawatt wind energy and battery storage project in Kazakhstan

The Acwa Power stand at Wetex in Dubai. The company is aiming for about 120 gigawatts of power-generating capacity in the next 10 years. Ruel Pableo / The National
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Riyadh-based energy company Acwa Power said its net profit for 2022 more than doubled on higher operating income as well as lower impairment charges.

Net profit attributable to equity holders after zakat and tax reached 1.54 billion Saudi riyals ($410.67 million), compared with 759 million riyals in 2021, the company said on Thursday in a statement to the Tadawul stock exchange, where its shares are traded.

The growth was driven by higher operating income as well as lower impairment losses in the year, compared with 2021.

Profit was also boosted by financial income recognised on the settlement of long-term financing and funding facilities as well as the divestment of a partial stake in the company’s Sirdarya project in Uzbekistan, it said.

“Looking back at 2022, which is our first full year as a listed company, we have proved that our develop-invest-operate-optimise business model can weather geopolitical, economic and supply chain challenges to a large extent,” said Paddy Padmanathan, president and chief executive of Acwa Power.

“With all our key financial indicators posting strong growth, we have demonstrated to our investor base that financing a responsible and robust company like ours will result in solid shareholder returns."

Operating income before impairment loss and other expenses for the year rose 14 per cent annually to 2.6 billion riyals, while revenue rose 0.77 per cent to 5.27 billion riyals.

Acwa Power, which is present in 12 countries in the Middle East, Africa, Central Asia, and South-Eeast Asia, has 68 projects in operation, advanced development, or construction ― with an investment value of 256.5 billion riyals and the capacity to generate 44.4 gigawatts of power and manage 6.2 million cubic metres per day of desalinated water.

In 2022, Acwa Power added 5.44 gigawatts of power generation and 600,000 cubic metres per day of water desalination capacity in Saudi Arabia, Egypt and Uzbekistan by signing new power or water purchase agreements, the largest capacity additions in a single year in the company’s history.

On Thursday, the company also announced that it signed a partnership agreement with Kazakhstan’s Ministry of Energy and Samruk-Kazyna, the sovereign wealth fund of Kazakhstan, to lead and develop a 1-gigawatt wind energy and battery storage project in the Central Asian country.

Acwa Power will initially invest $1.5 billion in the project, which marks its entry into Kazakhstan.

It is intended to "successfully decarbonise fossil fuel-based power generation following its scheduled completion in 2027", the company said.

Acwa Power is rapidly expanding its portfolio and aiming for about 120 gigawatts of power-generating capacity in the next 10 years, with a presence in 20 countries.

The company, which is developing a $5 billion green hydrogen-based ammonia production plant in Saudi Arabia’s smart city Neom, also plans to "replicate" the project elsewhere, Andrea Lovato, global head of hydrogen at Acwa Power, told The National this month.

In 2020, Acwa Power signed a $5 billion agreement with US-based Air Products and Neom to build the "world’s largest" green hydrogen-based ammonia production centre in the kingdom's $500 billion futuristic city.

The green hydrogen scheme at Neom will use 4 gigawatts of renewable power from solar, wind and storage to produce 650 tonnes a day of hydrogen from electrolysis, using technology supplied by German company Thyssenkrupp, the companies said at the time.

The project, expected to come on stream in 2025, will produce about 1.2 million tonnes of green ammonia each year.

“Our first full year as a public company involved many operational and financial developments — in addition to expanding in existing markets, we actively engaged in the debt capital markets and effectively recycled our capital in line with our long-term strategy,” said Abdulhameed AlMuhaidib, chief financial officer of Acwa Power.

“Looking ahead, we will continue to focus on optimising existing projects to deliver maximum value to our bottom line, and delivering new projects on time and on budget.”

The company's board approved a dividend payment of 606.8 million riyals for 2022, payable during 2023, it said.

Updated: March 02, 2023, 5:12 PM