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Saudi Electricity Company to issue $1.9bn Islamic bond in May

12 April 2010 – State-controlled Saudi Electricity Co (SEC) expects to raise up to 7bn riyals ($1.87bn) from an Islamic bond next month to fund expansion, even without a government guarantee.
 
Saudi Electricity’s chief executive, Ali Saleh al-Barrak, said the issue would take place next month and is projected to be for a minimum amount of 5bn riyals.
 
“The amount that we plan to raise stands at between 5bn and 7bn riyals but we have not fixed it yet, pending the exact identification of the needs,” Barrak told Reuters.
 
The Saudi bourse regulator Capital Market Authority (CMA) had earlier approved the issue. The ‘sukuk’ issue will be Saudi Electricity’s third after it raised 7bn riyals last year and a maiden issue for the same amount in 2007.
 
SEC is executing projects to add 5105 MW of new power capacity by 2012. The firm also plans to buy electricity from an independent consortium that is developing a power and desalination plant with an output capacity of 850 MW.
 
A sukuk is similar to a bond but complies with Islamic law, which prohibits the charging or payment of interest.