JEDDAH, 10 February — Authorities will soon start talks for private investment in its power sector to help finance expansion plans, a further step toward privatizing the vast industry, an official was quoted yesterday as saying.
"We are seriously working on this and there will be several meetings with many international and Saudi companies after the Haj to implement this plan," said Fareed Zaidan, governor of the Electricity Services Authority.
"We are looking for investors to enter and compete with the Saudi Electricity Company (SEC) to provide better services at low cost," the Okaz daily quoted him as saying.
The Kingdom set up the SEC in 1999, as part of moves to restructure the sector, by merging four regional power firms that had been reporting steady losses for years, prompting state intervention to help bail them out.
The Kingdom is struggling to keep pace with surging electricity demand, which is set to soar by 150 percent during the next 25 years.
It estimates that it will need $90 billion of investment by 2023, 54 percent of which for generation, 29 percent for transmission and 17 percent for distribution.
Zaidan said the first stage of privatizing the heavily subsidized electricity industry would be limited to generation, with SEC purchasing power at an agreed upon price.
"After 10 years (tariffs) will be based on supply and demand and competition," he said, adding that the regulatory body would review tariffs regularly to make sure citizens can afford them.
Industry and Electricity Minister Dr. Hashim Yamani said last year the Kingdom was set to open up power transmission to private investment, a sector that had previously been on a so-called "negative list" of sectors closed off to investment.
The Kingdom needs an estimated 50,000 megawatts of new capacity by 2023 and an additional 23,000 kilometers of transmission lines to create an interconnected national grid.
Saudi Arabia, the world’s largest exporter of oil, is trying to restructure its economy giving the private sector a bigger role in the development process.
