JEDDAH, 17 August 2005 — The Cabinet approved on Monday the establishment of the first privately owned company for the production of water and electricity. It thus becomes the second in the country. The Shuaiba Water and Electricity Company will develop, establish, operate and maintain the Shuaiba-3 project for the production of water and electricity, transporting and distributing and conducting all related activities.
The Council of Ministers approved in its weekly meeting on Monday the proposal made by the Minister of Commerce and Ministry to establish the Shuaiba Water and Electricity Company according to its basic system, making it the second licensed company for the production of water and electricity following the Saudi Electricity Company which is 76 percent government-owned. The decision comes as part of the government’s privatization program aiming to encourage the private sector’s investment in power production. The Shuaiba Water and Electricity Company is a follow up step to the previous licensing of the Water and Electricity Company (WEC), the activities of which are limited to buying electricity and water from the sources of production and selling them to consumers.
In June, a Saudi-Malaysian consortium was selected as the first-ranked bidder to build the SR9 billion Shuaiba Independent Water and Power Project (IWPP). Shuaiba is the first of the four IWPP projects which will be implemented by the private sector, following from the Supreme Economic Council’s resolution 5/23 issued on June 3, 2002. The other three projects include Shuqaiq, Raz Azzour and Jubail. The Saudi-Malaysian consortium will build, own and operate the 900 MW and 880,000 m3/d Shuaiba IWPP. The credit support is to be provided by the Ministry of Finance. Sixty percent of the share capital will be owned by the consortium; thirty two percent will be owned by Public Investment Fund (PIF) and the remaining eight percent will be owned by the Saudi Electricity Company (SEC).
According to Al-Riyadh newspaper, foreign investors will be allowed to participate in the establishment of the Shuaiba Water and Electricity Company which is estimated to cost SR5 billion and produce 880 thousand cubic meters of water and between 650 to 900 megawatts of electricity daily. The foreign investor is expected to participate as a partner with the SEC in addition to an IPO later.
The company is expected to begin operation in 2007.
In July, the National Power Company announced that the first electric power station established by the private sector in the Kingdom had begun its commercial operation. The National Power Company is a joint stock company by Zamil Group and Saif Group with each holding 50 percent. The project was established at a cost of SR750 million ($200 million) and began production on June 23, 2005. The project is located inside the industrial compound of the Saudi Petrochemical Company (Sadaf), which is a joint venture between SABIC and Shell, in Jubail Industrial City. Sadaf agreed with Jubail Power Company on a long-term contract to buy the electricity and steam produced by this project.