Abdullah Al-Shahri, governor of ECRA, made the announcement during a meeting with businessmen in Riyadh. He said the tariff hike was essential to offset the company’s deficit, improve its services and encourage prudent and rational consumption.
He hoped the new hike would not increase prices of commodities. But Fahd Al-Sultan, secretary-general of the Council of Saudi Chambers of Commerce and Industry, expressed fears the hike would have a negative impact on the Kingdom’s industrial strategy.
The ECRA chief agreed to Al-Sultan’s proposal to set up a joint committee for studying the hike’s impact on the economic sector. “If we find that it would have great impact on the industry, the plan would be reviewed,” he said.
Al-Shahri said the meeting was aimed at weighing different options before taking a decision related to the business sector. He spoke about growing electricity demand in the Kingdom. During summer, the consumption goes up to 40,000 megawatt. “This figure is expected to reach 120,000 megawatt by 2032,” he said. The governor disclosed plans concerning the establishment of an independent company for electricity transmission by the end of this year and four companies for power generation by next year.
“The new tariff aims to ensure adequate electricity supply at reasonable rates and achieve an acceptable revenue for the service provider, especially when we have an annual deficit of SR3.8 billion in the sector, he said. “The deficit could be reduced to SR900 million with the new tariff,” he added.
Al-Shahri said the residential sector consumes 53 percent of electricity and provides 34 percent of revenue while the industrial sector consumes 18 percent and contributes 16 percent to the revenue. He said even after the new hike, power tariff in the Kingdom would be the lowest compared to other GCC countries. The tariff hike for big industries would be within the range of SR2-15 per day and for small shops SR2 per day.
