Saudi Electricity Co. launches multi-billion plan

Contracts beckon following SEC's power plan for 2011.

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Saudi Electricity Company has unveiled a comprehensive investment plan for 2011 that includes the construction of 56 high-voltage power stations to reach 309,000 new subscribers, as the state-backed supplier races to meet the country’s rising energy demand. A building contract has already been signed for projects in Riyadh and the Eastern Province.

In a flurry of notifications to Saudi Arabia’s stock exchange, the Tadawul, the company aims to add 1,826 MW to the Kingdom’s grid next year, the funding for 567 MW to derive from private sector investment. This will see 21,000 km of distribution lines added to its existing network at a cost of SAR 3.8 billion, with work including the strengthening of 10 transfer stations.

A contract worth SAR 3.5 billion was signed yesterday with as-yet undisclosed “national company” for the expansion of a power plant in Riyadh, the capital, and station village in the country’s Eastern Province.

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Exactly 6,510 MW will come on-line from 2012, according to chairman Dr Saleh bin Hussein Al Awaji after a board meeting that saw the ratification of the country’s budget for the upcoming year. A total of 12,752 MW will be added between 2012 and 2016, by which time the company hopes its subscriber base will swell to 7.9 million.

Saudi Arabia is aiming to address a surge in demand for power on the back of a rise in both population and industry as its economy expands. Banque Saudi Fransi estimated that the demand is increasing 8%, with peak power demand up 85% between 1999 and 2008, according to its latest sector report. Around SAR 1 trillion is needed to meet the country’s need by 2025, it added.

Saudi Electricity Company will finance the work on the 10 transfer stations through a mixture of its own resources and borrowing from the markets, likely through debt issuance.

In July the country signed a US $1.5 billion agreement with Egypt to link the countries’ power grids. The two countries would split the cost of the project – which aims to exchange 3,000MW of electricity between the countries through direct current electrical lines – based on the amount of work on their land.

Saudi Electricity recently completed the pre-qualification process for the construction of a gas-fired power plant in al-Qurayyah and is inviting bids for the main contract with a deadline of 28th February.