Saudi Electric Company to Invest $28 Billion for Transmission and Capacity Augmentation

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Saudi Arabia's state-controlled Saudi Electric Company (SAU:5110) (SEC) (Riyadh, Saudi Arabia) will spend approximately $28 billion on new power generation capacity and transmission network upgrades during the next three years in order to meet growing energy demand in the country. Industry experts indicate that the investments in the energy sector in Saudi Arabia have been spurred by the five-year, $400 billion infrastructure and industrial development initiative promoted by the Saudi government.

Demand for power is also expected to increase because of the country's rising population. The population in Saudi Arabia, which in the last 30 years has increased three-fold to around 25.8 million, is expected to grow at a rate of 2.4% annually. SEC's current projects under construction are expected to add 13,000 megawatts (MW) of power generating capacity. SEC has also announced plans to invest an additional amount of $70 billion by 2018 to increase the power generation capacity by 25,000 MW.

Despite the global financial crunch and difficulty in funding, SEC is proceeding with its expansion and augmentation projects. The company has also explored the possibility of receiving loans from international banks and raising funds through the sale of Islamic bonds.

In June this year, SEC raised $1.87 billion from the sale of Islamic bonds. The company also signed an agreement with Export Development Canada (EDC) (Ottawa, Canada) and the Export-Import Bank of the United States (Washington, D.C.) for a 12-year loan of $1.09 billion. The Export-Import Bank has sanctioned $912 million, while the remainder has been cleared by EDC. A part of the $1.09 billion loan will be used for development of 2,900 MW of power projects using 23 gas turbines from GE Energy (Atlanta, Georgia). The turbines will be used in the construction of a new power plant near the existing facility in Al-Qurayyat. With the construction of the new plant, the total installed capacity in the Al-Qurayyat facility is expected to reach 1,890 MW. The other projects that will utilize the GE turbines are the 500-MW capacity expansion of the Faras power plant near Al-Hofuf in the eastern region of Saudi Arabia and the 490-MW capacity augmentation of Plant 8 in the western part of Riyadh.

Recently, SEC indicated that it would soon complete the financial closure of the $2.66 billion Rabigh steam power plant, about 150 kilometers north of Jeddah. The first phase of the power plant, which has a capacity of 1,200 MW, is set to begin operations by 2012-13. The company is also planning a similar project in Jeddah by 2011. The preliminary project study is under way.

SEC also awarded a contract worth $133 million for building a power substation in Riyadh to Alfanar Construction Company (Riyadh). The substation is expected to increase the capacity of electricity supply to meet the growing energy demand in the northwestern section of Riyadh. The substation, which will be connected to a 380-kilovolt (kV) transmission line and other existing substations, is expected to be completed by June 2011. Alfanar Construction Company, which is executing other projects valued at $1.2 billion for SEC across Saudi Arabia, is also building a 380-kV substation at West Makkah to take care of the growing power demand. The substation, which is part of SEC's nationwide grid-interconnect plan, will connect with the holy Al Harram area in the Makkah Al Mukaramah region. SEC has also awarded a contract worth $100 million to ABB Limited (NYSE:ABB) (Zurich, Switzerland) to design, deliver and commission three 110-kV substations in Makkah. As part of the contract, ABB will deliver low voltage auxiliary systems, gas insulated switchgear, supervisory control and data acquisition solutions, transformers, a network control and protection system, and medium voltage switchgear.

SEC is also exploring investment options for several other projects, including the 3,000 MW electricity link between Medina and Cairo, Egypt.

Saudi Arabia is considered to be one of the fastest growing economies in the Middle East. The country has one of the largest per capita power consumption rates in the region. Saudi Arabia's population and industrial expansion plans are expected to drive the demand for electricity by 7% every year. Industry analysts indicate that on average, investments of about $4.5 billion-$6 billion will be required every year for the next 15 years for the development of new power generating capacity to meet rising energy needs. By 2032, Saudi Arabia's forecasted energy demand is expected to increase four-fold to 140,000 MW.

View Project Report - 097000340 097000348

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.