Saudi Electricity Company creates a subsidiary to produce electricity

RIYADH (Reuters) – Saudi Electricity Co has announced plans to establish an electric power company after shareholder approval, according to analysts of the movement.

The Gulf's largest utility company said in a notice to the Saudi Stock Exchange that it had convened a shareholders' meeting on Dec. 18 to "vote on the creation of a production company. of energy "without giving details.

The public investment fund, the sovereign wealth fund of the kingdom, accounts for 74% of Saudi Arabia 's electricity. Saudi Aramco, the other major shareholder in Saudi Aramco, holds about 7%.

The kingdom is seeking to raise some $ 200 billion over the next few years through privatization programs in 16 sectors ranging from petroleum to health care, education, airports and grain mills.

The distribution of Saudi Electricity's business to more than one company is a cornerstone of the Kingdom's energy sector reforms and the restructuring of the electricity sector.

Since at least 2008, Riyadh plans to split the company into separate companies that can be offered to both citizens through an initial public offering or to partners of local or foreign companies.

But the plan failed because of the focus put by the government on other proposals, such as the possible inclusion of Aramco.

Earlier this month, two well – known sources said Softbank had instructed Deutsche Bank to advise on its plans to invest in the Kingdom 's electricity sector. The Japanese group has also shown interest in distributing electricity to the largest oil exporter in the world.

One source said Softbank may consider acquiring a minority stake in the Saudi Electricity Company from the Public Investment Fund.

An industry analyst, who requested anonymity, said the new subsidiary could indicate that the company would continue its long-awaited restructuring and privatization plan.

"They can transfer all the generators into the new assets of the company and then privatize them," he said.

As part of the reforms undertaken by the government to develop the economy of the kingdom and reduce dependence on oil, solar energy is a way to reduce the amount of crude oil used to produce electricity and increase the quantities available for export.