Electricity is part and parcel of modern life. We need electricity to operate most modern equipment. Virtually every household utensil we use today is electric. Naturally under these circumstances the consumption of electricity has increased a thousand-fold compared to earlier times. When power consumption increases greatly, then the revenues of the electric company should also increase proportionally. What has happened here in the Kingdom, however, is exactly the opposite. We simply cannot understand how the Saudi Electricity Company (SEC) could record losses amounting to hundreds of millions of riyals.
Al-Eqtisadiah business newspaper, however, recently reported that SEC had lost SR686 million during the first half of this year. The company admitted this when reporting its half-year performance. If this amount represents the company’s loss for the first half, it means losses may exceed SR1.2 billion by year’s end. This huge loss cannot be explained if we take into consideration the large revenues the company makes from sales.
In the past, the company made huge profits which benefited its shareholders. Many Saudis, who owned shares in the country’s electricity companies, lived on the dividends which were distributed every year. And in those days, remember that power consumption amounted to only five percent of today’s consumption. What has happened? Why is SEC losing so much money despite a tremendous increase in power consumption?
While talking about SEC’s losses, I would like to make a passing reference to the national campaign to reduce electricity consumption. The campaign is important particularly when it comes to avoiding power cuts. Despite all efforts by the public to make better use of electricity, in many areas, we still suffer often from power cuts.
The Eqtisadiah report on SEC losses raises a number of questions which require answers. What does it mean when the company posts losses so soon after announcing profits in its unified budget last year? Was the company experiencing something unusual which might explain the huge loss or should we expect such losses to continue in future?
These are valid though perhaps embarrassing questions but the shareholders have a right to some kind of explanation from the company.
14 August 2002
