Saudi Electricity Company (SEC) has plunged into a deeper quarterly loss as fuel prices and operating costs for the Riyadh-listed utility firm climbed.

The company reported a loss of SR2.34bn ($624m) for the last three months of 2016, down from SR1.44bn recorded for the same period of 2015, SEC said in a statement to Saudi Stock Exchange (Tadawul), where its shares are traded. The company had reported a net profit of SR4.4bn profit for the third quarter of last year.

Prime reason for the rise in the net loss for the current quarter is due to “the high cost of sales as a result of the increase in fuel prices and higher depreciation expenses,” SEC said in the bourse statement.

The full-year 2016 net income, however, rose 36.85 per cent to SR 2.11bn, up from SR 1.54bn at the end of December 2015. The year-on-year gross profit also increased to SR3.01bn in 2016 from SR2.58bn in 2015.

SEC, the largest utility firm in the region, attributed the jump in yearly profit to an increase in operating income and “improved operating efficiency despite rising fuel prices”.

As part of reducing burden on state coffers, Riyadh at the end of 2015 removed some of the subsidies in electricity, water and fuel prices, which pushed their prices up. SEC, at the time, said that it expects little impact on its earnings, as higher fuel prices would offset increased revenues from electricity sales.

In 2017 budget, the government has indicated it will continue to review fuel and electricity prices, which could see another hike later this year.

The government in November announced it is establishing a national programme to increase efficiency and reduce consumption in the energy and water sectors. The move was part of Riyadh’s programme to reduce electricity and water subsidies by SR200bn by 2020.

SEC, itself is being restructured with an aim to improve operational efficiencies. The government plans to split the mega utility firm into four generation companies and sell their shares in separate initial public offerings (IPOs) on Saudi bourse.

Abdullah al-Shehri, governor of state utilities regulator Electricity & Cogeneration Regulatory Authority (Ecra), on 2 November said that SEC is planning to privatise the first company, which will own about 20GW, in 2017.