Saudi Arabia aims to liberalize its power industry beginning with the privatization of the electricity sector by 2014, experts said. The privatization move aims to create a competitive market for electricity generation in Saudi Arabia, where at present the Saudi Electricity Company ( SEC ), which is majority owned by the government, generates, transfers and distributes electricity on a national basis.
The restructuring will involve dividing SEC 's electricity generation business into similar companies that will compete with each other and SEC 's independent power providers (IPPs). The SEC will also set up a single buyer of electricity from the four electricity generation companies and the IPPs. A single separate transmission company has already been established and has been in operation since January 2012. "We are working now at establishing four generation companies and one distribution company by 2014," said Amer Al-Swaha, head of SEC 's IPP program said.
"The four generation companies will have similar capacity and technology and will not be based on geographic region. They will all have the same starting point. This will allow us to compare their relative performance," he said. "All the four companies and the IPPs will be there. And you will have a single buyer model to buy all the power from all those companies and pay a transmission fee to the transmission company and the distribution companies a distribution fees," he added.
A liberalized power sector is expected to help ease increasing electricity demand in the Kingdom, which rose by 8.9 percent to 51,000MW in 2011. "Demand is rising strongly and we expect it will be significantly higher than 120,000 MW in 2030," added Al-Swaha.