Saudi Arabia may raise electricity price

Industry regulator says tariff increase being considered to improve energy efficiency
Saudi Arabia may raise electricity price
The government spends about SR50bn a year to subsidise fuel needed for power production
By Bloomberg
Tue 05 Oct 2010 10:50 AM

Saudi Arabia may raise electricity tariffs in the Arab world’s biggest economy to improve energy efficiency, the industry regulator said.

“We are going to request to consider other elements of the tariffs,” Abdullah al-Shehri, governor of the Saudi Electricity and Co-generation Regulatory Authority, said in an interview in Jeddah. He added that the agency will seek higher fees for first-time connectivity and capacity usage.

Saudi Arabia, the world’s biggest oil supplier, introduced revised electricity rates for the government, industrial and commercial sectors on July 1. The tariffs were forecast to generate more than SR3bn ($800m) in annual revenue, the official Saudi Press Agency said in June.

Saudi Arabia wants private companies to contribute to the kingdom’s 300 billion-riyal power-capacity expansion plan to help cut subsidy costs. The government spends about SR50bn a year to subsidise fuel needed for power production, al-Shehri said on September 3.

State-controlled Saudi Electricity Co. powers about half of its plants with heavy fuel oil, crude and diesel, Saleh Alawaji, deputy minister for electricity, said in an interview yesterday. The other 50 percent is from natural gas.

“We are very concerned about energy efficiency,” said Alawaji, who is also chairman of the board of Saudi Electricity. The government wants to eliminate using diesel to run its plants because of the cost, he added.

Power demand is set to grow as much as 8 percent a year for the next five years, Ali al-Barrak, chief executive officer of Saudi Electricity, said on Monday.

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