JEDDAH — Saudi Electricity Co (SEC), the Gulf's largest utility firm, is in talks with local and international banks to raise a multi-billion-dollar loan, according to two sources aware of the matter. The offering, which one source said could be worth between $3 billion and $5 billion in total, will be split between a dollar-denominated portion and a riyal-denominated tranche, the sources said, speaking on condition of anonymity as the information is not public. The riyal-denominated tranche is expected to be worth around SR5 billion ($1.33 billion), the first source said, adding the transaction would have a three-year lifespan but with an option to extend the maturity beyond that point. "The company is trying to mop up cash it can get at a good price point from the market. They are exploring all options available in the debt market," the first source said. SEC did not respond to emails and calls by Reuters. Chief Executive Ziyad Al-Shiha told Reuters in May the firm was looking for investment opportunities to offset financial pressures on its core electricity business. In April, the company said its net loss for the first quarter of the year more than doubled to 1.94 billion riyals ($517 million). However, SEC's earnings performance fluctuates wildly between seasons, with heavy air-conditioner usage in the summer months driving up demand. Analysts at HSBC and NCB Capital forecast SEC will make a profit of SR2.64 billion and SR1.26 billion respectively in the second quarter. The first source said both portions of the loan would be structured as revolving credit facilities, giving SEC the flexibility to opt when it wants to withdraw the cash. Saudi Arabia's population has grown from 4 million in 1960 to almost 30 million in 2014. It is is the main electricity producer and consumer in the Gulf states, with 272 billion kWh gross production in 2012 – 150 TWh from oil and 121 TWh from gas. Energy use for electricity and heat production including desalination in 2011 was 28,783 PJ, 57% of it from oil. It consumes over one-quarter of its oil production, and while energy demand is projected to increase substantially, oil production is not. Generating capacity is over 30 GWe. Demand is growing 8% per year and peak demand is expected to be 70 GWe by 2020 and 120 GWe by 2032. The Ministry of Water & Electricity plans to install 24 GWe of renewable capacity by 2020, and 50 GWe by 2032. The Ministry has plans to install 24 GWe of renewable capacity by 2020, and 50 GWe by 2032, and is looking at the prospects of exporting up to 10 GWe of this to Italy or Spain during winter when much generating capacity is under-utilized (cooling accounts for over half the capacity in summer). The 50 GWe in 2032 was to comprise 25 GWe CSP, 16 GWe solar PV, 4 GWe geothermal and waste (together supplying 150-190 TWh, 23-30% of power), complementing 18 GWe nuclear (supplying 131 TWh/yr, 20% of power), and supplemented by 60.5 GWe hydrocarbon capacity which would be little used (c10 GWe) for half the year. The nuclear target date has now been put back to 2040.
Ma'aden net falls in Q2 Saudi Arabian Mining Co (Ma'aden), the Gulf's largest miner, posted a 27.2 percent fall in second-quarter net profit on Tuesday, missing analysts' forecasts. Net profit for the three months to June 30 was SR270 million ($72 million) versus SR370.8 million in the corresponding period of 2014, it said in a bourse statement. — SG/Reuters
