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Saudi Electricity to be divided into four separate companies

Saudi Electricity Company (SEC), the Gulf’s largest utility by market value, is to be split into four equal-sized independent power generation companies. This will end the monopoly of the state-owned SEC which generates 54 GW electricity across 45 plants in the country.

The Saudi Arabia Electricity & Cogeneration Regulatory Authority is reported to have appointed a financial adviser as the first step to break up SEC. It is planning to sell a minority stake of 25% in each of the four companies to foreign investors in the hope to promote competition and bring in foreign knowledge and skills to the domestic market. The four companies will be geographically diversified, and will inherit SEC’s current development pipeline in equal shares. They will sell their output to a single new national offtaker.

SEC was created after the merger of all 10 power utilities in Saudi Arabia in 2000. It generates and distributes electricity supply, and invests in electric power projects in Saudi Arabia. SEC is currently 74% owned by the Saudi government, 6% by the world’s largest crude oil producer Saudi Arabian Oil Company (Saudi Aramco), with a float of 20% on the Saudi stock exchange market. With a market capitalisation of $16 billion, the company has proposed to invest $80 billion in the next decade, and has invested heavily in solar energy in recent years. This corresponds with the Saudi government’s recent announcement to invest $109 billion to produce an additional 41 GW of solar energy by 2032.