Saudi Electricity Co. (SEC) will receive a SR15 billion ($4 billion) loan from its main shareholder, the Saudi government, over the next two years, Saudi Press Agency reported Monday. The soft loan to the Arab world's biggest utility matures over 25 years, SPA said, citing a government statement Last week, SEC, whose major shareholder is the Saudi government, said its first-quarter net loss widened to SR782 million from a net loss of SR771 million a year earlier mainly on higher operational costs to meet growing demand. Saudi Arabia expects SEC to invest $80 billion over the next 10 years to add 20,000 megawatts of power generation capacity. The utility is planning to sell Islamic bonds, or Sukuk, next month to raise SR7 billion to finance its expansion plans, SEC chief executive officer Ali Saleh Al Barrak told Dubai-based Al Arabiya Television Tuesday. The Sukuk issue, which was approved by the Capital Market Authority, will be Saudi Electricity's third after it raised SR7 billion last year and in 2007. The company has hired HSBC Holdings PLC and Samba Financial Group to manage the Sukuk sale, Al Barrak said, adding that SEC doesn't have enough cash to invest in adding new capacity. SEC will soon award contracts to build a 2,400 megawatt power plant after it obtained a soft loan from the government. The cash-strapped firm has been struggling to meet pent up power demand - which grew by about 8 percent in 2009. The bulk of the loan will finance the construction of a new power plant in Rabigh, where the giant King Abdullah Economic City is under construction. “The loan will finance expansion projects for power generation and mainly Rabigh's 2,400 megawatt power plant. Contracts for Rabigh plant will be awarded this year, within a few weeks,” Barrak said. The plant is expected to be completed in the summer of 2014. Three international firms have made bids of between $3.94 and $4.34 billion to build the Rabigh plant, with South Korea's Doosan Heavy Industries and Construction being the lowest bidder. Other bidders include Hyundai Heavy Industries and France's Alstom. The Saudi government – which holds a 74.3 percent stake in SEC – last year granted another 10-year reprieve on paying dividends to its largest shareholder, extending a similar arrangement the utility had in place for the 10 years to 2009. The firm has been undergoing a deep restructuring since 2006 to enhance profitability including lowering its workforce, tapping the bond market and launching partnerships with private firms to reduce the financial burden of its expansion. SEC said last year it would spend SR80 billion by 2012 to add 13,000 megawatts. – Agencies to its capacity which stood then at about 37,000 MW. ($1=3.750 Saudi riyal) ($1=1040.8 Won) (Editing by Jon Loades
