Saudi Regulator May Hike Electricity Rates to Encourage Thriftier Usage

Saudi Arabia may raise electricity tariffs in the Arab world’s biggest economy to improve energy efficiency, the industry regulator said.

“We are going to request to consider other elements of the tariffs,” Abdullah al-Shehri, governor of the Saudi Electricity and Co-generation Regulatory Authority, said in an interview in Jeddah yesterday. He added that the agency will seek higher fees for first-time connectivity and capacity usage.

Saudi Arabia, the world’s biggest oil supplier, introduced revised electricity rates for the government, industrial and commercial sectors on July 1. The tariffs were forecast to generate more than 3 billion riyals ($800 million) in annual revenue, the official Saudi Press Agency said in June.

Saudi Arabia wants private companies to contribute to the kingdom’s 300 billion-riyal power-capacity expansion plan to help cut subsidy costs. The government spends about 50 billion riyals a year to subsidize fuel needed for power production, al- Shehri said on Sept. 3.

State-controlled Saudi Electricity Co. powers about half of its plants with heavy fuel oil, crude and diesel, Saleh Alawaji, deputy minister for electricity, said in an interview yesterday. The other 50 percent is from natural gas.

“We are very concerned about energy efficiency,” said Alawaji, who is also chairman of the board of Saudi Electricity. The government wants to eliminate using diesel to run its plants because of the cost, he added.

Power demand is set to grow as much as 8 percent a year for the next five years, Ali al-Barrak, chief executive officer of Saudi Electricity, said yesterday.

To contact the reporter on this story: Glen Carey in Riyadh at gcarey8@bloomberg.net.

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net.

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