Riyadh – Mubasher: Saudi Arabia announced splitting up the Saudi Electricity Company (SEC) to create four power-generating companies and establish a separate transmission company, Apicorp research report on Monday.
SEC is the kingdom’s vertically integrated electricity company that owns most power-generating assets and almost all transmission and distribution network, the report said.
Apicorp noted that as a result for the Saudi government allowing the private sector to enter the generating sector, most of the ongoing and future projects will be independent power producers (IPPs), but SEC will hold the major equity stakes.
The reliance on IPPs is set to increase as GCC governments face increasing deficits and lower budgets because of lower oil revenues, Apicorp stated.
The research highlighted that SEC’s capacity represents 60GW of the total 80GW estimated capacity, while the remaining 20GW operated by the private sector.
As a solution for the rising demand, the kingdom will use 28GW of capacity already in the pipeline, of which 12GW are SEC projects and the rest are IPPS, Saudi Aramco and Saline Water Conversion Company (SWCC) projects
“Major IPP projects include the 2.1GW Rabigh 2 and the 1.5GW Fadhili cogeneration plant, expected on line in 2017 and 2019. So far this year, the 1.5GW Fadhili cogeneration plant was the only IPP awarded to an Engie-led consortium at an expected cost of $1.5 billion,” the report said.
The research disclosed that a joint venture between Aramco and SEC will hold the majority stake and the electricity will be sold on a 20-year power, water and steam purchase agreement.
The IPP model is also expected to prevail in the Kingdom’s latest 3.5GW renewable-energy target by 2020, and 9.5GW by 2030. SEC aims to attract the private sector to develop 50MW solar at Al-Jouf and another 50MW at Rafha.
SEC has borrowed in the first half of 2016 more than $3.8 billion, surpassing the record $3.7 billion set in 2014 and 2015.
