The five-year bullet loan, co-financed by eight major banks, will help fund part of the company's capital expenditure programme: chief executive
17 August 2017
By Nina Chestney
LONDON, Aug 16 (Reuters) - State-controlled utility Saudi Electricity Co (SEC) will use the proceeds of a $1.75 billion syndicated loan secured earlier on Wednesday for investment in its whole supply chain, its chief executive said.
The five-year bullet loan, co-financed by eight major banks, will help fund part of the company's capital expenditure programme, SEC's chief executive Ziyad al-Shiha said in an interview in London.
"Each year we invest around 30 to 40 billion Saudi riyals' ($8 billion to $11 billion) worth of capex to meet demand in the Kingdom," he said.
"Some (of the money) will go towards power plants already under construction - some of which will come online in 2017 and some in 2018," Shiha added.
reported in May that the company was talking to banks about a syndicated loan, with sources saying the company had decided against tapping the bond market for the deal because bankers felt that changes to the electricity sector as part of Saudi's national transformation program might make it too hard to sell to bond investors.
Saudi Arabia plans to split the utility into four separate companies that would be offered either to local citizens through offers on the stock market or to local or international corporate partners.
The plan is part of wider reforms to the Saudi energy sector, in which private companies would have to play an important role in generating electricity.
Shiha said the split was still under evaluation by government agencies, which are looking at the whole portfolio of the utility.
Riyadh-based ACWA Power chief executive Paddy Padmanathan told Reuters in March he expected the first of four power generation companies owned by Saudi Electricity to be offered by the year-end.
"This is still being looked at and I don't think it will materialise this year but the due diligence process has kicked off," Shiha said.
"Three things - restructuring of the company, privatisation and restructuring of the sector - all have to be coordinated to ensure recipients of services are not impacted."
"It is very difficult to say when the process will end," Shiha said, adding that the company has done a lot of work on environmental and financial due diligence and the value of its assets.
SEC had an asset base of 441.2 billion riyals at the end of June, it said in a statement on Wednesday. ($1 = 3.7501 riyals) (Editing by David Evans).
© Reuters News 2017