Saudi Electricity Company (SEC) is unbundling its electricity generation assets into four companies, and will privatise the first company, owning about 20GW, in 2017, according to Abdullah al-Shehri, governor of the Electricity & Cogeneration Regulatory Authority (Ecra), speaking at MEED’s Leaders in Energy Reform conference on 2 November in Dubai.

“The government decided the sector should be privatised, so we are working on a restructuring plan,” said Al-Shehri. “Generation will be totally divested and put forward for the private sector to participate in. The initial stage is to break down power plant legacies into four generation companies, and put them on the market for the private sector.”

However, potential investors have expressed some concerns over the condition of some of SEC’s older generation assets. Previous privatisation of existing assets in the GCC has tended to involve the development of new capacity, then the decommissioning of older plants.

SEC will continue to operate transmission and distribution in the kingdom for now. Medium-term plans include involving the private sector in distribution.

Saudi Arabia is also focusing on improving the efficiency of existing generation capacity.

“SEC has invested a lot over the past five years converting single-cycle plants to combined-cycle,” said Al-Shehri. “The target is to increase the current level of efficiency of 34 per cent to 43 per cent by 2020. The other aspect is the availability of gas. We used to be heavily dependent on liquid fuels, but in the past five or six years, Aramco has invested in gas fields, and we are converting power plants to gas. Most new power plants will use gas.”