There is the potential for Saudi Electricity Company (SEC) to launch an initial public offering (IPO) for major parts of the company when it has completed its restructuring programme.

In an exclusive interview with MEED, Abdullah al-Shehri, governor of Saudi Arabia’s Electricity & Cogeneration Regulatory Authority (Ecra), said that he believed there would be an opportunity for SEC to float parts of the company on the stock exchange once the restructuring process was completed.

“I think SEC could have an IPO for the generation companies, once they have been created. They could part of an IPO, or they could also turn it into a strategic partnership for investors from Saudi Arabia or from outside,” he explains. “And the same is possible for the transmission company. I think it is going to be operated on a commercial basis, it will be very valuable and the IPO would be a good option for it.”

SEC is undergoing a restructuring programme, which will involve the creation of four generation companies, an independent system operator, and separate transmission and distribution companies.

“We developed a restructuring plan – and provided a time scale for implementing it with SEC,” says Al-Shehri. “The plan will break down the SEC generation plants into four companies to encourage competition in this sphere and establish a principal buyer which will be buying from everybody and selling to the distribution companies.”

While SEC’s progress with its restructuring plan has been slower than originally planned, Al-Shehri is positive about the prospects of advancement of the programme in 2016.

“These things were supposed to be well established by the end of 2015, but I hope this year they [SEC] will be able to accomplish the plan. The principal buyer and independent system operator are in the process of being established and we are finalising their licences. The transmission company is already in existence, and we are modifying its licence as the independent system operator is being taken out of the distribution company.”

While SEC’s progress with its restructuring plan has been slower than Al-Shehri would like, he is positive about the prospects of advancement of the programme in 2016.

“These things were supposed to be well established by the end of 2015, but I hope this year they [SEC] will be able to accomplish the plan. The principal buyer and independent system operator are in the process of being established and we are finalising their licences. The transmission company is already in existence, and we are modifying its licence as the independent system operator is being taken out of the transmission company.”