A major step towards privatisation in the power sector has been taken with the 20 May publication of the first set of financial results by Saudi Electricity Company (SEC). The results cover the period from the company's incorporation on 5 April 2000 until the end of 2001. SEC has turned in a healthy profit for the period, allowing it to declare a dividend and make substantial one-off provisions to clean up the balance sheet.
The net profit after zakat is SR 711 million ($190 million), on total operating revenues of SR 27,346 million ($7,292 million). The company declared an 8 per cent dividend, entailing the distribution to shareholders of a total SR 307 million ($82 million). SEC has total capital of SR 38,288 million ($10,210 million), divided into 765.9 million shares with a nominal value of SR 50 ($13.3) each. The shares are still listed in the names of the companies that have been consolidated into SEC, pending agreement on how the shares should be reallocated. The government controls roughly 80 per cent of SEC. According to balance sheet notes, the regional consolidated companies (Scecos) account for about 99 per cent of SEC, with Sceco-Central holding 34.8 per cent, Sceco-West holding 30.6 per cent, Sceco-East with 18 per cent, and Sceco-South with 15.5 per cent. Saudi Aramco owns 41 per cent of Sceco-East.
SEC allocated SR 2,329 million ($621 million) as non-recurring adjustments in the balance sheet - effectively a one-off provision covering a variety of issues relating to the company's consolidation.
A senior SEC official says the earnings from the first period of operation were boosted by the relatively high electricity tariffs that applied from April 2000 until the government decided to lower tariffs in October that year.
The award of dividends has been welcomed by stock market investors. However, some industry analysts have raised questions, noting that the dividend payment might encourage some consumers to call for fresh reductions in tariffs at a time when the government is seeking to attract private investment into the power sector.
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