RIYADH: Saudi Electricity Co. (SEC), the Gulf’s largest utility by market value, has been granted another ten-year reprieve on paying dividends to the government, the Cabinet said.
The government’s decision to relinquish its share of dividends until 2019 extends a similar arrangement the cash-strapped utility had in place for the ten years to 2009. The renewal, announced late on Monday after a Cabinet meeting, will save it hundreds of millions of riyals per year.
For 2008 alone, the government’s share of SEC’s dividend was SR2.17 billion ($578.7 million). The government owns a 74.3 percent stake in the utility. Saudi Aramco owns 6.9 percent and the rest is held by the Saudi public.
“The council of ministers has approved that the government relinquishes its share of profits distributed by Saudi Electricity for another ten years,” the Cabinet said after a meeting chaired by Custodian of the Two Holy Mosques King Abdullah.
The extension starts at the end of the current Muslim lunar year which is expected to coincide this year with Dec. 17.
The firm usually distributes profits only once a year, unlike many listed firm which give out dividends on a quarterly basis.
That is partly due to the fact that it makes losses in the first and fourth quarters when milder temperatures lower consumption. It makes profits in the second and third quarters, when power consumption surges due to heavy reliance on air-conditioners in the summer.
The firm has cut its workforce, tapped the bond market and launched private sector partnerships to reduce the financial burden of its expansion.
