Saudi Arabia has established the principal buyer for buying electricity as part of plans to begin the process of privatising major parts of its electricity market.

The newly formed principal buyer, which has been named ‘The Saudi Company for Energy Purchase’, has been established as limited liability company wholly owned by Saudi Electricity Company (SEC) with a capital of SR2m ($530,000).

The buyer has been established with a board of directors, consisting of seven directors. The first CEO of the company is Osama bin Abdulwahab Khawandanah, who has been senior vice president of energy trading and ventures at SEC since September 2016.

MEED reported in November 2016 that SEC was aiming to select the principal buyer and ringfence it within SEC by the end of the year. SEC’s board of directors approved the establishment of the buyer in February, which was subsequently followed by approvals from the required regulatory authorities before its first meeting in the last week of May.

The primary role of the principal buyer will be:

•  to purchase and sell electricity
•  the purchase of fuel to supply to electricity producers who have signed agreements with the buyer
•  import and export electricity to markets outside Saudi Arabia

The establishment of a principal buyer is a key step towards the planned privatisation of Saudi Arabia’s power generation market.

SEC is planning to split its existing generating assets into four generation companies, and is planning to privatise the first company, which will own about 20GW, in 2017.