The Business Year

Carl Sheldon

UAE, UAE, ABU DHABI - Energy & Mining

Inject New Life

CEO, TAQA

Bio

Carl Sheldon was appointed as a Member of the Board and then as TAQA’s CEO in 2011. Previously, he held various other positions at TAQA, including General Counsel, Deputy General Manager, and General Manager. Before joining TAQA in 2008, he was a Partner with Allen & Overy LLP, focusing on the energy sector. He holds a Master’s degree from Cambridge University.

TBY talks to Carl Sheldon, CEO of TAQA, on diversification efforts, investment opportunities, and acquisitions.

Abu Dhabi is diversifying its economy away from oil and gas. What potential do you see in the sector and what trends are you observing?

There are two trends in this area that present TAQA with opportunities. On the one hand, Abu Dhabi is indeed in the process of diversifying its economy, while on the other hand the whole world is wrestling with its fuel mix. It is part of Abu Dhabi’s vision for 2030, and the Emirate recognizes that the age of fossil fuels will end, and is planning for that world today. The process of moving the economy away from primary commodity exports at the same time as the world wrestles with its fuel mix brings a set of opportunities. We are in a unique position because not only do we have those scaled businesses in other markets, but also we are present throughout the value chain. Part of our mission is that we are scale players in all our businesses in other markets, and we are owner-operators of these businesses; thus we have large operating businesses in the rest of the world. We are the largest UAE investor in Ghana, Morocco, the Netherlands, the UK, and Canada. We have large businesses in the oil and gas and power sectors, where the license to operate is a crucial element because these businesses are capital intensive, highly regulated, and of significant importance to the host government.

What role will TAQA play in the signing of a deal between the UAE and Turkish governments to develop energy plants and mines in Turkey?

The inter-government agreement has been signed. Underlying that is a Memorandum of Understanding (MoU) between TAQA and EÜAÅž, which is the government-owned Turkish energy generating company. Together, we will develop power plants in the Afşin-Elbistan basin in south-central Turkey, where there is a huge lignite deposit. It probably has sufficient fuel to produce 7,000 MW-10,000 MW of power. We will start by buying an existing plant, the Afşin-Elbistan Plant B, which is a 1,440 MW lignite burner currently in operation. Over time, we will build a series of plants. There is a total potential in the region for 11,000 MW of capacity, but we are not committed to that. Our role in Turkey is to buy the first plant and develop around it as is feasible. We have looked at Turkey for a long time, and like the growth dynamics there.

Which of TAQA’s high-profile series of global acquisitions are most significant, and how would you evaluate their quality?

Over the past three to four years, we have devoted ourselves to essentially disposing of what we foresee as non-performing assets and channeling that money into our other businesses. We have spent our time concentrating on our portfolio and then devoting our time developing organic projects. We are spending about $2 billion a year on capital expenditure (CAPEX) in projects within our existing businesses. Between 2010 and 2014, we will spend about $10 billion in total on developing projects inside our existing portfolio—drilling in western Canada, the UK’s North Sea, the Bergermeer gas storage project in the Netherlands, the Jorf Lasfar power plant expansion project in Morocco, and our Takoradi expansion in Ghana. These are our five major spending programs. They are all developing value-accruing projects within our existing footprint. The focus of the company changed when I took over, shifting the strategy from growth by acquisition to stabilizing the business and developing value opportunities. Now we are four years into that five-year program, and are starting to see that spending turn into revenue. The free cash flow dynamic has started to change dramatically. We have focused more strategically on our country’s entry into Turkey and Iraq, while stabilizing the North Sea business and generally trying to develop our future business opportunities around three factors. The first is what Abu Dhabi brings to this; for example, is there something that we have the ability to trade as a government-related entity of the Emirate? Secondly, do we have existing business synergies? And, thirdly, do we have the resources? Where those three circles intersect will be the sweet spot on our strategy map.

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