Saudi Electricity signs deals for Qurayyat plant

State power supplier to work with Samsung, ACWA and bank circle

Saudi Arabia aims to meet its risign power demand.
Saudi Arabia aims to meet its risign power demand.

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Saudi Electricity Company, Saudi Arabia’s state-owned power supplier, said it has signed an agreement with a contractor and financial backers to build the Qurayyat power station in the Eastern Region at a cost of SAR 10.7bn.

The listed company has agreed with Korean contractor Samsung C&T Corporation and the utilities investment company ACWA International to build, own and operate a 4,000MW plant. Funding for the plant will be backed by the MENA Infrastructure fund, with further finance by “some local and international banks as well as agencies of export subsidiaries”, according to the company.

Part of the financing will be derived from Islamic loans through bonds with maturities of more than 20 years, according to Paddy Padmanathan, CEO of ACWA International, speaking at a press conference yesterday in Riyadh. It was revealed at the same event that HSBC Holdings and Standard Chartered, the UK banks, are among the financiers.

Saudi Arabia is struggling to provide the infrastructure and wattage for a swelling population and an increasingly industrialised country. Saudi Electricity has been the government’s main focal point for developing stations and power grids nationwide, and in the last year the company has signed agreements with contractors to kick-start projects.

The company also needs to provide for the Haramain High Speed Rail project currently in construction. In April it handed two related contracts to Alfanar Construction worth $506m.

SEC revealed that its revenues have increased 10% since the rise in power tariffs in the industrial and government sectors.

The company plans to tender four independent power projects, worth approximately $10bn, within the next two years, according to CEO Ali Al-Barrak, speaking in May. He added that the SEC currently has two large IPP projects under construction, with a third project that was in the final stages of financial close, with six international companies bidding on the project.

To achieve its construction target, the company has also secured a clutch of long-term loans. Earlier this year, it secured a $13.6bn 25-year loan from the government, on top of a $500m loan from Bank of Tokyo-Mitsubishi.

Meanwhile, ACWA International is planning an IPO for the fourth quarter of next year, according to Padmanathan.

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