RIYADH, 21 June 2007 — Saudi Electricity Co. (SEC) said yesterday it would sell Islamic bonds to raise at least SR2 billion ($533.3 million) in 2007 for expansion to meet demand for power that is growing at around 7 percent a year even as Fitch Ratings assigned the company’s senior unsecured and issuer default ratings (IDR) of “A+” and a stable outlook.

SEC Chief Executive Ali Saleh Al-Barrak told Reuters in an interview that the company needs to invest SR190 billion by 2015 to increase power-generating capacity to 54,000 megawatts from 34,000 megawatts now.

“We hope the private sector will participate in the construction of plants as independent producers, to contribute to 25-30 percent of the capacity increase planned by 2015,” he said.

The ratings reflect SEC’s dominant positions as the owner and operator of the entire national electricity transmission and distribution network. They also take into account its 85 percent market share in generation capacity. Despite the planned entry of independent power producers to the market, Fitch expects SEC to remain the key producer for the foreseeable future.

Its ratings are also supported by good demand growth prospects on the back of economic and population growth, as well as the company’s low-cost feedstock, purchased under long-term supply agreements with Saudi Arabian Oil Company (Saudi Aramco).

With record oil revenues driving economic growth in the world’s top crude exporter, demand for power is growing 7 percent a year, Barrak said. “In the most populated areas such as Riyadh, our studies revealed that demand rose 10 percent between 2006 and 2007.”

To avoid blackouts, Saudi Electricity is urging industrial users to change working hours to non-peak demand periods between 0400 p.m. and 1100 a.m.

“Electricity cost for industrial firms is SR0.19 at peak-demand while it is only SR0.09 during non-peak periods of the day,” he said.

The firm hopes the government will agree to raise electricity tariffs for non-residential users that account for 48 percent of the total consumption.

“It will help in financing the projects that we need to develop and which require huge capital,” Barrak said.

Saudi Electricity can raise SR7 billion a year from its own resources for expansion and the rest will be funded by loans and Islamic bonds, Barrak said.

He declined to give an exact size of the first sale of bonds.

“It’s a program of issues. It won’t be less than SR2 billion, it will be more than that.”