Sector awaits approval of reform plan

15 October 2001

A masterplan for the restructuring of the power sector, drawn up by the US' Arthur D Little, is to be approved by the end of the year. The plan charts a path for the liberalisation of the sector, taking into account the natural gas initiative and the privatisation of Saudi Electricity Company. Industry & Electricity Minister Hashim Yamani is understood to be seeking a consensus within the cabinet before approving the plan (MEED 20:7:01).

The plan is a prerequisite for the restructuring of the sector, which is becoming increasingly necessary, in light of the growing capacity shortfall. Increasing private sector involvement is the aim, but a regulator must be appointed before private projects can go ahead. Such an appointment will be made according to a separate schedule after the approval of the masterplan.

The addition of new capacity in the power sector is under consideration alongside a series of developments planned in the water sector, for which a new ministry is being created. Arthur D Little advised the Saline Water Conversion Corporation on the implications of private sector participation in cogeneration power and water desalination plants, which are more efficient than single-use power plants. The kingdom treats power and water as distinct areas, requiring strong consultation between the bodies leading the two sectors.

The new masterplan aims to guarantee the commercial viability of all schemes in both power and water.

Development of the power sector is a primary ambition of the gas initiative. A further 4,000 MW is expected to be added to the kingdom's power generation capacity through foreign investment. The masterplan sets out ways of aligning foreign and private sector investment with plans to expand capacity.

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