Saudi govt loan to cover 70 pct of SEC projects
Loan to serve projects in the next 5 to 6 years; SEC adding around 13,000 MW from 2012-2016
June 14, 2011 4:06 by p.deleon
State-controlled Saudi Electricity Co (SEC) will use a 51.1 billion riyal government ($13.63 billion) loan to finance 70 percent of its projects, its chief executive told al-Arabiya television.
Saudi Arabia’s cabinet approved on Monday the 25 year, interest-free loan for the Gulf’s largest utility to help ease the financial burden of bringing new power projects online.
“The loan will be used to finance a number of strategic projects over the coming 5 to 6 years,” Ali Saleh al-Barrak said on Tuesday, adding they would cost around 60 billion riyals.
He cited transmission lines and additional generation capacity, which now stands at 48,000 megawatts as well as upgrading equipment and raising efficiencies.
Saudi Arabia, which sits on the world’s biggest oil reserves, is struggling to keep pace with rising power demand amid rapid population growth. It plans to diversify its energy mix, including nuclear and solar energy away from depending on oil alone.
SEC, 81 percent-owned by the government, has projects to add 1,826 megawatts (MW) in 2011 and will add 12,752 MW of power from 2012 to 2016 as it seeks to meet the kingdom’s power demand rising 7 to 8 percent annually.
The firm plans to boost capacity to at least 80,000 megawatts by 2020 and has started to implement a number of independent power producer (IPP) projects, for which the private sector will contribute roughly 100 billion riyals of the 300 billion riyals spending programme through 2018.
It has a current installed power capacity of 50,000 MW.
“Our IPPs are still in place, this loan will finance 70 percent of our projects whose total cost nears 60 billion riyals,” Barrak added.
Projects which are already under construction and expected to be online in 2012 are located in Rabigh, on the Red Sea coast and in the Saudi capital Riyadh. A third IPP project the Qurayyah 1 plant is in the final stage of being awarded and is expected to be in operation in 2014. [ID:nLDE73O05L] ($1=3.750 Saudi Arabian Riyal) (Reporting by Marwa Rashad and Jason Benham, writing by Reem Shamseddine; editing by Reed Stevenson)