Saudi Arabia may invest $90b to expand and boost power network |
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Jeddah - Saudi Arabia will invest $90 billion to expand and enhance its power network, according to information made available to Khaleej Times here on Wednesday.
It is studying a restructuring plan to develop its electricity industry area and open up the power market to the private sector and local investors. The government is also studying a plan to complete its national grid linking all the provinces by 2011.The Saudi Electricity and Cogeneration Regulatory Authority (ECRA)Electricity and Cogeneration Regulatory Authority (ECRA)
has already embarked upon a comprehensive plan to develop the industry to move to a competitive market where supply and demand controls the market process.
The restructuring plan is based on international best practices after studying other countries' experiences.
Saudi Arabia needs 2000 MW of electricity annually to meet its local demand which requires investments of SR10 billion.
Demand for electricity and fresh water is expected to increase by 7 per cent annually. Saudi Electricity Co. (SEC)Saudi Electricity Co. (SEC) has agreed to a SR6 billion Islamic loan with a group of six local banks.
Al Rajhi BankAl Rajhi Bank, Banque Saudi FransiBanque Saudi Fransi, National Commercial BankNational Commercial Bank, Samba Financial GroupSamba Financial Group, Saudi British BankSaudi British Bank and Saudi Hollandi BankSaudi Hollandi Bank, will refinance maturing debt and help pay for new projects.
SECSEC will repay its Murabaha loan over 12 years. SECSEC spent SR13.5 billion on expansion projects last year and approved four new projects last month.
Fitch, the international ratings agency, has upgraded its long term issuer default and senior unsecured ratings of SECSEC, to 'AA-' from 'A+' with a stable outlook. Fitch's rating is in line with the government's strong support for SECSEC.
The new rating will help SECSEC get financing for its power generation and transmission projects in addition to strengthening its bargaining power with local and international investors. SECSEC's managing board has approved four new projects, including the first phase of Riyadh's tenth power station with a capacity of 2000 MW.
The other projects are the expansion of Rabigh station to 720 MW, Al Shuaiba station to 1.191 MW and Juba station to 100 MW.
The four said projects will cost SR26 billion as part of the SECSEC strategy to meet growing local demand for electricity.
SECSEC has also approved five new contracts including the setting up a new transformation stations, connecting west Makkah station and East Madinah station with the main network, setting up fuel pipelines for Al Qassim station, and upgrading the boiler system at Ghazlan station.
The projects will be implemented at a cost of SR1.9 billion to enhance the network ability and meet growing local demand for electricity.
© Khaleej Times 2008
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