Abu Dhabi-based TAQA, co-owner of power operations in the Caribbean including Jamaica has an apparent two-year exit clause in its US$320 million ($28.6 billion) stake in the joint-venture with Japanese-based Marubeni Corporation, which it can invoke starting July.

The clause appears to absolve TAQA of its share of debt obligations related to the joint-venture which stood at some two billion AED ($48.2 billion) at December 2009 consisting of 1.1 billion AED ($26.5 billion) in long term liabilities and the remainder in current liabilities. The joint-venture is however lucrative earning TAQA 55 million AED ($1.3 billion) in profit at December 31 2009.

Despite the profit, TAQA stated in its annual report that between July 2010 and July 2012 it “has the right to require Marubeni to acquire all of the common shares in Marubeni TAQA Corporation that TAQA holds at the time at fair market value”. It added that it also has the right to require Maurubeni to acquire all of the loans made by TAQA to Marubeni TAQA Caribbean (MTC) and MTC related entities at fair market value; and (also) procure TAQA’s release from each of the guarantees or financial assurances provided by TAQA in respect of MTC and/or MTC related entities.

TAQA did not respond to Business Observer written queries sent over a week ago whilst local based Jamaica Public Service Company (JPS) referred the Business Observer back to TAQA even though promising to respond.

In March 2009, Marubeni Corporation sold 50 per cent of its Marubeni Holding’s Caribbean power assets to TAQA otherwise known as Abu Dhabi National Energy Company for US$320 million. TAQA’s gross power portfolio as at December 2009 stood at 13,729 megawatts (mw) of capacity with 2,288 mw (gross) coming from the Caribbean operations which includes Jamaica, the Bahamas, Trinidad & Tobago and Curaçao.

TAQA is growing so fast that it expects to triple its asset base to US$60 billion in a few years. Its assets now stand at US$24.9 billion ($2.2 trillion) and it made 773 million AED ($18.6 billion) in profit for its 2009 year-end but this was a decline on the 2.2 billion AED ($53 billion) made in 2008.

Marubeni originally bought US-based Mirant Corporation’s Caribbean-based operations in April 2007 for US$1 billion including related debt of US$350 million, power purchase obligations of approximately US$153 million and estimated working capital at closing. The net proceeds to Mirant from the sale were some US$565 million after payment of transaction costs estimated to be approximately US$14 million.

Mirant’s Caribbean business included controlling interests in JPS and Grand Bahama Power Company. Mirant also owned 39 per cent of PowerGen, the owner and operator of three power plants in Trinidad, 25 per cent of Curaçao Utilities Company which provides electricity and other utility services and a US$40-million convertible preferred equity interest in Aqualectra, an integrated water and electric company in Curaçao. The Jamaican Government sold JPS in 2001 for some US$201 million.