Masterplan homes in on transmission

12 October 2001

A sketch of the likely new structure of the kingdom's power sector was given by Christopher Dann, associate director of US consultant Arthur D Little, at MEED's corporate and project finance conference in London on 16 October. The US firm has drawn up a masterplan for the restructuring of the sector, now under review by Saudi Electricity Company (SEC)shareholders, including the government and Saudi Aramco.

The plan envisages a single buyer model in which a new entity, the Saudi National Grid (Transco), would act as the kingdom's sole electricity offtaker. Existing SEC generating assets would be put in a new arm of the company responsible for generation. Some of the generating assets would then be sold to private developers to take over as independent power projects (IPPs). Power would also come from cogeneration plants run by the Saline Water Conversion Corporation and grassroots independent water and power projects (IWPPs) could be set up.

Transco, which would be owned by SEC, would sell power to four new regional distribution companies and to large industrial companies. Its creditworthiness would be assured by the cash flow from industrial customers connecting to the grid at more than 110 kV, and from improvements to its financial structure with the publication of a balance sheet.

Transco would also be responsible for overseeing build-operate-transfer (BOT) transmission projects, in areas of greatest need and cost. The plan details one such area as being between Qunfudah in the southwest and Shuaibah power plant in the west.

The role of the future regulator for the sector remains undefined. 'My understanding is that the draft structure of the regulating body is under consideration by the different SEC stakeholders, and will be approved by the end of the year,' said Dann. 'Its role will not be dissimilar from other regulators in the kingdom. The degree of the body's independence is still an open question.' Under the plan, the regulator would conduct a periodic review of the cost of generation, transmission and distribution and set the trading tariffs. It would have the power to issue licences for power projects and other private sector investments.

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