JEDDAH, 11 October 2003 — Water and Electricity Minister Dr. Ghazi Al-Gosaibi has announced plans for a gradual sale of the government’s stake in the Saudi Electricity Company.
Gosaibi, who is chairman of the SEC, said the sale would be contingent on the market. “In the end the majority stake will be owned by the citizens,” Okaz daily quoted him as saying.
According to the Arabic daily, the government now holds 611 million shares in the company, which has a capital of SR38.5 billion and a total of 766 million shares, each with a nominal value of SR50.
Gosaibi recently announced that the government would pay the SR3.378 billion it collected in electricity surcharge to SEC shareholders in the form of additional shares. Each shareholder with 100 shares will get an additional seven shares.
The Saudi stock market has the capacity to absorb more shares thanks to its growing liquidity, the Saudi Arabian Monetary Agency and the Finance Ministry say.
The sell-off of shares in state-owned utilities will help the Kingdom scale down its public debt, which is estimated at more than $150 billion. Privatization of the electricity sector will also help the government find the much-needed funds to finance its huge electricity projects.
A recent study conducted by the Dubai Center for International Research and Studies and the Gulf Organization for Industry Consultations, says the Kingdom’s electricity sector will require $90 billion (SR337.5 billion) over the next 20 years.
Gosaibi told a recent function in Riyadh that the country’s privatization plan was aimed at protecting the interests of citizens as a whole rather than serving the interests of a few investors.
The Riyadh function was held to mark the official opening of a giant electricity plant in the capital by Crown Prince Abdullah, deputy premier and commander of the National Guard. Gosaibi urged employees of the Saudi Electricity Company (SEC) to work hard to improve the quality of its service.
“There is no room or justification for negligence,” he added.
Addressing the same ceremony, Suleiman Al-Qadi, executive president of the SEC, said that since its establishment in 2000, the SEC has implemented projects worth SR21 billion.
“At present a number of projects are under construction at a total cost of SR17 billion,” he added.
Gosaibi announced last week that his ministry was opening 21 new power generation and desalination projects worth SR48 billion to Saudi and foreign investors.
Some 30 companies, around 20 of them Saudi, have offered to participate in the four new water and electricity projects — Shuaiba Phase III, two desalination plants in Jubail, and the Shaqeek plant in the southern region.
According to Ahmed Al-Mudaiheem, deputy governor of the Saline Water Conversion Corporation, the private sector will have a 60 percent stake in the new projects. The other 40 percent will be divided between the Water and Electricity Company (eight percent) and the Public Investment Fund (32 percent).
