Saudi Arabia's power generator awarded loan to fill financing gap as it ramps up electricity production
Saudi Electricity Co has been awarded a SR51.1 billion government ($13.63 billion) loan to fill a financing gap as it ramps up electricity production, the state news agency said on Monday.
Saudi Arabia's cabinet approved the 25-year, interest-free loan "to cover the fiscal deficit expected for the implementation of electrical projects urgently needed during 2011 and 2012," SPA said in a statement.
Saudi Arabia plans to invest $88 billion over the next 10 years to boost power capacity as demand for electricity continues to grow 7-8 percent annually, the kingdom's water and electricity minister said last month.
Saudi Arabia, which sits on the world's biggest oil reserves, is struggling to keep pace with rising power demand amid rapid population growth.
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 rising
It plans to invest $80 billion to boost capacity to at least 70,000 MW by 2020 from current installed capacity of 50,000 MW.
"The company needs this money to build its huge projects and it cannot go to the banks to get loans as the high interest rates will result in it having losses over the next ten years," said Hisham Abo Jamee, Chief Investment Officer at Bakheet Investment Group.
In March, SEC gave builders an extra week to bid for its gas-fired al-Qurayyah power plant, south of the eastern city of Khobar. The plant will have a power generation capacity of between 1,800 and 2,100 MW and is estimated to cost $1.8 billion.
The plant is expected to be fully operational in 2014.For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.