Despite a surge in electricity consumption in the Kingdom amid rapid population growth and high public investment, the industry's revenue is dampened by low electricity tariff, the National Commercial Bank (NCB) said in a study. The country's total actual generation capacity surged 49,138 MW at the end of 2010. In nominal terms, the market size was SR27.9 billion ($7.4 billion). For the same period, per capita electricity consumption was nearly 7,822 kWh, having grown by over 40 percent since 2000. "Saudi Arabia's rapidly rising population rate, expansionary fiscal policies and resulting high investments in social and physical infrastructure, have exerted pressure on the existing power networks," the bank study said. It noted that in an attempt to boost sector revenues and profitability, the government last year approved a new tariff structure for non-residential sectors, maintaining the cross-subsidy existing in the tariffs. Residential subscribers of consumption, at 4.9 million, continued to command the most electrical consumption, accounting for 51 percent of the total in 2010 or 108,627 GW. This translated into an annual average demand of 22,204 kWh per household consumer, or a monthly equivalent of 1,850 kWh. "This monthly consumption is categorized in the primary tariff bracket of five halalas/kWh (0.13 cent/KWh)," the study said. "As the bulk of consumption remains concentrated here, the existing tariff structure is not optimal for electricity conservation, resulting in wastage. Consequently, as the majority of revenues are generated from the lowest tariff bracket, this will restrict the profit margins for an industry already facing financing challenges," the study noted. The CEO and President of the Saudi Electricity Company (SEC) Ali Al-Barrak said recently that SEC plans to spend $80 billion over the next decade to keep pace with population growth happening in the Kingdom, which will result in an increase in demand for electricity by more than 30,000 megawatts by the year 2020.
