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Saudi Arabia to boost electric power investment

By the OGJ Online Staff

HOUSTON, Nov. 9, 2001 — Saudi Arabian government officials opened a $100 million power station in Jeddah, Saudi Arabia.

The station is expected to ease pressure on the existing network, which was being subjected to such extreme demand during the summer that power cuts often occurred, Makkah Gov. Abdul Majeed said. Majeed urged consumers to reduce consumption, adding the government intended to invest as much as $117 billion by the year 2020 to meet the growth in demand from the country’s soaring population.

The government also said it would grant concessions to the private sector to construct new power plants on a build-operate-transfer basis.

Hashim Yamani, Saudi Arabia’s minister of industry and electricity, said the project was part of a wider plan aimed at meeting the country’s growing demand for electricity, which was expected to increase by 150% over a 5-year period ending in 2003.

He said opening up the electricity generating sector to competition would allow for future development. Privatization of the power sector resulted in the merger of the country’s regional electricity into a single company worth $9 billion.

The company serves 7,000 cities and village and more than 3 million customers and is the larger producer of power in the region. Yamani told a conference this week that domestic power transmission activities would be open to the private sector, including local and foreign investors.

He added restructuring of the sector was nearing completion, giving momentum to the privatization drive. Yamani said a new holding company would be set up jointly with local and foreign investors to create a domestic energy services industry.

A joint-stock company with initial capital of $213 million, it would be mainly owned by the private sector. He said the government contribution would be “in kind, in the form of two existing energy services companies.”