RIYADH, 7 March 2004 — The Saudi Electricity Co. (SEC) yesterday signed a SR6 billion loan arrangement with six local banks to finance capital investments, the first such deal since it was set up four years ago, its chief executive said. SEC will use the loan, repayable over 15 years, primarily to support its ongoing capital expenditure program.
Participants in the loan are Banque Saudi Fransi, Samba Financial Group, the National Commercial Bank, the Arab National Bank, the Saudi British Bank and Saudi Hollandi Bank. Gulf International Bank acted as financial advisers.
“Though denominated in Saudi riyals, the terms agreed provide for the inclusion of an optional US dollar tranche of up to $300 million,” said Sulaiman Al-Qadi, chief executive officer of the SEC.
“In seeking the loan, we recognized that we were challenging the banking community to support the future development of our business in an evolving regulatory and sectoral environment,” Al-Qadi said in a press statement.
In structuring the loan, “careful attention has also been paid to ensure that the SEC will have flexibility to develop business in line with the expected direction of regulatory planning for the electricity sector in the Kingdom,” the statement said.
Saudi Arabia is implementing SR17 billion worth of power projects to cope with surging demand.
The Saudi electricity sector has been undergoing a major restructuring, with the establishment of SEC in 2000 from the merger of 10 loss-making Saudi power firms seen as a prelude to full privatization.
SEC, which was listed on the Saudi stock exchange two years after its formation, posted a net profit of $396 million in 2003.