JEDDAH, 27 June 2005 — A new electricity law, which is being debated at the Shoura Council, envisages privatization of the sector as well as expansion of electricity services throughout the Kingdom, according to Dr. Saleh Al-Malik, secretary-general of the consultative body.
“The main objective of the law is to achieve expansion of the industry and improve electricity services in the light of the current development plan that envisages privatization of a number of sectors including electricity,” the Saudi Press Agency quoted Al-Malik as saying.
He said the new law is drafted to reorganize the electricity sector, adding that the private sector would participate in the industry on “a commercial basis.” He said the law was in line with the government’s economic reforms and its efforts to create a suitable atmosphere for private investments.
The new law would allow consumers to select between electricity companies, which provide their services at competitive rates. “It also encourages private sector participation in electricity expansion projects and protects investments in the sector,” he explained.
Al-Malik said the law would ensure adequate supply of electricity, protect public interests and rights of consumers and encourage local and international investment in the electricity industry. “This is one of the important laws discussed by the Shoura,” he added.
The new law determines the relationship between four parties — the Saudi Electricity Company, consumers, Saudi and foreign investors, and the Water and Electricity Ministry. It will also activate the role of the General Electricity Authority.
According to a recent study, Saudi Arabia requires SR430 billion ($115 billion) during the next 23 years to set up new power generation projects. The Kingdom’s existing capacity is put at 23,400 megawatts, and it needs an additional 20,000 MW by the year 2010. According to a study, power consumption in Saudi Arabia increases by 5.5 percent annually as a result of the growing number of population and industries. During the last three years, the Saudi Electricity Company has implemented projects at a cost of SR21 billion.
Some 20,000 Saudi contractors were given a presentation in Riyadh recently on future electricity projects worth billions of riyals during a meeting organized by Saudi Electricity Company at the Riyadh Chamber of Commerce and Industry.
Desalination plants on the Red Sea and Arabian Gulf are one of major sources of electricity in the Kingdom. The government recently offered new desalination projects worth SR36 billion to private investors as part of its drive to fully privatize the sector. They include four giant independent water and power producers (IWPPs) — Shuaiba Phase-3, Shuqaiq Phase-2, Ras Al-Zour and Jubail Phase-3 — which are estimated to cost SR23 billion.