Launch Partners

Monday, October 2, 2023

Launch Partners

Abu Dhabi National Energy Company considers issuing green Sukuk in coming years

Following Abu Dhabi National Energy Company (TAQA)’s Green Finance Framework launch, Fazil Abdul Rahiman, the group vice-president of sustainability and climate change at TAQA, told ISFI that the company does not have immediate plans to issue green Sukuk under the framework.

“No plans at the moment; however, we would like to go for green Sukuk in the coming years,” Fazil told ISFI.

TAQA launched its Green Financing Framework which covers the issuance of green Sukuk, bonds, loans and other debt instruments earlier this month.

Proceeds from any future green Sukuk issuances under the framework will be channeled toward financing or refinancing green projects under the renewable energy, sustainable water and wastewater management, energy efficiency, clean transportation and terrestrial and aquatic biodiversity categories.

In addition to financing green projects, the framework also allows for proceeds being channeled toward purchasing an equity stake in ‘pure play companies’ which attribute a minimum of 90% of their revenues to one or more eligible green project categories.

Notably, the recent GreenSaif Sukuk facility is an example of a green Sukuk issuance to refinance an equity investment in an entity involved in green projects where the proceeds were channeled toward refinancing GreenSaif’s bridge loan as part of its acquisition of a stake in Saudi Arabian Oil Company’s subsidiary, Aramco Gas Pipelines Company.

According to TAQA’s Green Financing Framework, its equity investment in Abu Dhabi Future Energy Company, or Masdar, which it undertook in 2022, falls into the category of pure play company equity investment.

According to Bashar Al Natoor, the global head of Islamic finance at Fitch Ratings, project finance Sukuk such as the GreenSaif Sukuk are a trend and development worth watching in the region, Bashar told ISFI.

Commenting on the capital market space in the GCC, Bashar noted that while international investors are primarily the target investor profile for sustainable investments, sustainable instruments are likely to be Islamic to not alienate the Islamic investor base.

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