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New Saudi power firm finalises privatisation move

RIYADH: The new board of directors of the Saudi Electricity Company (SEC), created by the merger of the kingdom's power companies, has endorsed the linkup and confirmed subscription of its full capital.

An SEC statement said the firm "has completed all necessary procedures for issuing a license by the commerce ministry" -- the last step before the company can begin operations.

"After the commerce minister issues the license the company will start operating," said the statement, received by Reuters on Sunday.

It was issued after a board meeting on Saturday, chaired by Industry and Electricity Minister Hashem Yamani.

Saudi officials had said SEC's capital was 33.7 billion riyals ($8.9 billion). The capital would be drawn from assets of the various power firms and the electricity surcharge fund. The value of government power projects would also be added.

The Saudi power companies had signed a merger agreement on February 16 in the latest move in a plan to privatise the power sector in the kingdom -- the first tangible step toward the long-awaited liberalisation of the state-dependent economy.

Saudi Arabia began steps to privatise its power sector in December by establishing SEC. The kingdom, the world's largest oil exporter, aims to give the private sector a bigger role in the economy.

Yamani had said new electricity charges would be implemented once SEC had been listed in the official gazette and begun operating.

Four major electricity companies operating in various parts of the kingdom have been reporting steady losses for years, prompting government intervention to help bail them out.

Six other smaller companies operate in the northern part of the kingdom. The government owns around 85 percent of the combined assets of the power companies.

Electricity transmission, generation and distribution will be split into separate entities. The generation sector will be open to both Saudi and foreign investors, officials have said.

The kingdom is struggling to keep pace with surging electricity demand, rising at 16 percent a year. Officials say the power sector needs $117 billion in investment by 2020.-Reuters