Financing for Saudi Electricity Company (SEC) projects is likely to come from two sources — direct financing from (SEC or the government) or from the private sector (IPPs), according to Ali Saleh Al-Barrak, CEO of SEC. "Most of the IPPs will be in the field of electricity generation. We define the number, location, timing and the project size selected for IPPs. We currently have three IWPPs (independent water & power projects) under construction," Al-Barrak told Nadim Al-Hamid of Arab News in an exclusive interview in Jeddah.
Following are excerpts from the interview:
What are the main features of the Saudi Electricity Company's (SEC) future plan? What are the projects SEC is currently implementing or planning to implement in Jeddah in the near future?
SEC is facing continuous growth in the demand for power. The load peak during 2012 increased by 7 percent compared to 2011. The production of energy jumped to more than 545,000 megawatts (MW), including the contribution of desalination plants. The number of customers has reached 6.6 million. According to the estimates of the expansion plan implemented by the company, the total of the load peaks will amount to 90,000 MW by 2022, and that there is need to implement electricity projects during the coming 10 years costing more than SR 514 billion. Now the company is implementing 23 projects in Jeddah for upgrading power generation to cope up with the anticipated rise in demand. Prominent among them are:
The first major project will expand Rabigh Power Plant (phase six) by adding new units at a total capacity of 2,800-2,400 MW, thus expanding the plant capacity of 1,224 MW. Power generation in the south of Jeddah will commence with a substation (380/110/13.8 KV) at the third Industrial City in Jeddah. Other projects include transmission lines (380 KV) and changing the path of the transmission line of (Alharmain train), plus Alsanabil substation (380/110/13.8 KV).
What is the total generation capacity of SEC compared with Arab countries? If so, is SEC the main producer of electricity?
According to the latest report issued by the Arab Union on the production of electricity in 2011, the loads in Saudi Arabia total 48,367 MW. It is clear that the Kingdom's consumption in summer is equal to that of 12 Arab countries. SEC announced in 2012 that it produces 54,000 MW. The demand for electricity increased annually at a rate of 9 percent, and definitely SEC is the main producer of electricity in Saudi Arabia.
What is total number of customers in Jeddah up to the end of last year and what is the total number expected next year?
The total number of customers at the end of last year (2012) was 983,829. It is expected to reach 1,018,014 by the end of the current year. SEC is making utmost efforts to provide customers with electricity.
In this context, what is new in the plans and programs of the company in the Western Province?
SEC has allocated SR 1.60 billion to provide 125,000 customers in the Western Province with electricity supply in 2013. The company has accomplished several projects in the field of services in the Western province. Here are some of them:
• Opening new service offices on the outskirts of Jeddah, including a service office in the north. Now the company is working toward opening an office in south of Jeddah.
• Establishing an electronic network with the municipality of Jeddah.
• Connecting customers with the system that is recording those who are paying their energy consumption bills.
• Recruiting more engineers to benefit from the experience of other employees. . . Replacing the old network and establishing new substations, and implementing systems and channels to provide employees with needed services.
• Nominating 13 contracting companies providing customers with power supply.
• The company's website is dedicated to serve customers, shareholders and contractors.
What are the main projects SEC is currently implementing in Jeddah?
The main projects the company is implementing include:
• Providing electricity to King Abdullah Sport City.
• Providing electricity to King Abdullah Conference Center.
• Working on the project of providing a drainage system for rain water.
• Operating some substations like Iskan, Bani Malik, Alsamir, Alkhaldiya and Al-Basateen.
What is the Saudization rate in the company? What are your future plans and programs in this regard?
SEC is continuing with development programs and services with a view to achieving the company's mission, which requires a highly competent and qualified workforce. The company has set training programs in the fields of administrative and technical specializations. It recruits 1,500 Saudi youth at its training institutes annually. The trainees are then enrolled for on-job-training. The company also recruits annually 450 university graduates in electrical and mechanical engineering, and computer science. As a result, 24,000 Saudi technicians, engineers, and administrators are currently working for the company, while the rate of Saudization has jumped to 88 percent compared with 73 percent in 2000. SEC has also obtained King Abdul Aziz Reward on Total quality Management. It has seven times received the Prince Naif Reward for Nationalization of Jobs.
What kind of build-operate-transfer (BOT) deals and independent power projects (IPPs) will be open for receiving bids?
Financing for projects may come from two sources — direct financing from (SEC or the government) or from the private sector (IPPs). Most of the IPPs will be in the field of electricity generation. We define the number, location, timing and the project size selected for IPPs. We currently have three IWPP projects under construction. For the IPP program, three generation projects have been defined. First is Rabigh that is already under construction to provide the grid with 1200 MW. Second is in the bidding stage to build, operate and own a 2000 MW combined cycle gas fired power plant. Third will be on the Gulf and will be in the market before the end of next year.
Some customers complain that the cost of electricity is going up even when their consumption is low?
Electricity prices are constant for more than 12 years. But climate deeply affects consumption, especially in summer. So the bills go high and are even doubled... However, the company isn't responsible for introducing any new tariff and it will not impose it. The Electricity Co Generation Regulatory Authority was initiated in 2000 within the framework of restructuring the Electricity Sector. The aims of this new organization are to make available electricity services at reasonable prices. It has also the right to revise periodically and on scientific basis the cost of electricity services, and ways to protect the rights of customers, producers, transmitters, and distributors.
What is the progress of the power grid for facilitating energy exchange between the GCC and Egypt?
The construction of the GCC grid was recently completed and the GCC countries have started benefiting from the reservoir of electricity power. Now there is an intensive effort to establish a Gulf market for energy exchange between the GCC countries, according to the dual agreement. The Gulf Interconnection Authority and The Electricity and Water Committee are pushing forward to benefit more from the Gulf grid in future, The GCC countries are planning to link their power lines with Egypt. This is expected to take place shortly.
Some Saudi towns experienced several power cuts last summer?
Yes, limited power cuts were witnessed in some areas last summer due to faults in the distribution network. Of course, some customers were affected but in certain cases the technical teams of SEC tackled the faults in a very short time. I would like to confirm that there was no complete blackout, and the rate of power outage last summer was less than before. Customers here feel that there were several power cuts because of summer, which also coincided with Ramadan. The question of power cut to the company is a big challenge, and we are exerting the utmost to overcome it by strengthening the electricity system and replacing the old network.
Some parts of Jeddah are suffering from power cuts. What is the main reason for that?
As I mentioned above, all power cuts referred to were beyond the control of the company. With regard to Jeddah, power cuts happen when ground cables are spoiled or damaged by contractors while implementing other projects. About 260 cases of such damages caused by contractors were reported in Jeddah during one month, and in some cases it led to fire incidents as in the Alshatti substation in the city. However, such power cuts in Jeddah need a special plan and more coordination with some governmental bodies while introducing new projects.
What are the main obstacles facing the company in the Western Province, particularly in Jeddah, with regards to customer services?
The main obstacles facing the company in Jeddah are that it is so difficult to find sites for setting up generation plants, for substations, and for distribution and the network purposes. Besides it is difficult in Jeddah to get a permit in order to establish a substation in new residential areas due to the stipulation issued by the Ministry of Municipalities and Rural Affairs.
Can you compare the standard of electricity services in the Kingdom with the developing countries?
The SEC is considered the biggest electricity utility in the Middle East and North Africa, as it supports the main growing economy in the region. The company facilitates the manufacture of petrol and petrochemicals and most of the industrial towns Kingdomwide.
The company also provides 6.6 million residents in 12,378 towns and villages with electricity supply. It provides annually 400,000 new customers and 250 groups of inhabitants in remote areas with electricity. The company produced more than 50,000 MW during 2012, and the demand for power increased by 9 percent equivalent to 4,000 MW a year. Despite all this, the company is able to meet the increasing demand for power as it works on the basis of focused plans.
What is SEC's new vision regarding its corporate social responsibilities (CSR)?
The SEC has laid down a CSR plan for the coming 10 years. It comprises 17 programs and aims to promote relations with the society. The company has a special plan to support employees who are no more. This is being done by appointing their sons in the company and providing them scholarships and assistance. This program is linked to the program of supporting the employees' families, and ties the relations between the two. We are also planning to provide our employees' sons with courses in computer and English language. There is a program to help low income employees financially in order to overcome their economic difficulties. Our plan also includes a volunteer program with the aim of developing the spirit of volunteering among our employees. This program will provide other bodies with volunteers as we have more than 28,000 employees in the company. Our Positive Energy Program will be introduced in the near future to spread CSR among our employees. We are going to concentrate on the ethic of work through positive messages. We will give particular attention to the employees by involving them in sports, taking care of their health, and helping them to benefit from leisure activities. We are planning to establish a club for inventors to motivate and encourage our scientifically talented employees.
