INVESTMENTS IN POWER SECTOR

FOR ECONOMIC GROWTH

Saudi Economic Forum1-2 March 2011Riyadh

DATANo of

customer ( Million)

Peak load (MW)

Available generation

(MW)

Transmission

(KM)

Energy (GWH)

2000 3.6 22000 23000 30000 114000

2010 5.7 45000 48000 49000 198000

Increase 2.1 23000 25000 19000 84000

Growth (%) 58% 104% 108% 63% 73%

GROWTH (2000 – 2009)

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Generation 174 projects US$18 bln .

Transmission 290 projects US$14 bln.

Distribution 170 projects US$ 2.3bln.

Total 634 projects US$ 34.3bln. will be in operation 2010-2014

projects Under Execution

((44))

LOAD FORECASTMW

Over the next 10 years:

Generation expansion US$45 billions

Transmission expansion US$ 22 billions

Distribution expansion US$ 13 billions

Total capital investment US$ 80 billions

FUTURE CAPITAL INVESTMENT

Year Project name Capacity (MW) Date in Service

Rabigh Steam Expansion 2,400 2014PP-10 (Steam) 990 2014Duba PP (IPP) 500 2014Al-Shogaig PP 1,200 2014Al-Jubail / Ras Al Zour 630 2015Jeddah South 1,200 2015Al-Shogaig PP 1,200 2015Al-Jubail / Ras Al Zour 1260 2016Al-Shogaig PP 800 2016Duba PP 250 2016Jeddah South 600 2016

Future Generation to meet the demand

2010

2011

2012

6

Al-Jubail / Ras Al Zour 630 2017Al-Ogair / Salwa PP 630 2017Jeddah South 600 2016Al-Ogair / Salwa PP 1260 2017Jeddah South 600 2018Al-Ogair / Salwa PP 630 2018Al-Shogaig PP 400 2017Al-Ogair / Salwa PP 1,260 2019Al-Shogaig PP 400 2018

2016 Al-Jubail / Ras Al Zour 1,260 2020 total capacity: 25000 MW capital Cost : US$ 40bn

2013

2014

2015

7

Year Project Length KM Date in Service

HAIL-ALJOUF-380KV 300 2014ASIR_NAJRAN 380KV 400 2014GAISOUMAH -ALFADLI 380 KV 250 2014BISHA_DAWASIR 380KV 500 20155th 380 KV LINE TO CENTRAK 400 2015MADINAH-HAIL 360 2015RIYADH-JEDDAH DC line 800 2016TABUK-TABARGAL 600 2016WEAST _SAUTH 2ND LINE 500 2016

380KV future transmission projects

2010

2011

2012

8

IPP PROGRAM SEC will Continue to encourage private investors

to build, operate and own power projects .

30 – 40 % of Future generation will be IPP .

SEC partnership will be 20%-50% in the equity.

Long term power purchase agreements (20years)

With reasonable return on investment .

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10

IPP PLANNED PROJECTS

NAME OF IPP PROJECT

CAPACITY (GW)

INVESTMENTBlnUS$

PROJECT COMPLETION

QURAYYAH 1.8 2.3 2014DHEBA 1.6 2.1 2015

SHUQAIQ 1.6 2.1 2015ALOGAIR 2.4 2.8 2016

JEDDAH SOUTH 2.4 2.8 2017

RAS ALZOUR 2.4 2.9 2019

US $ 15bn TO BUILD 12 GW

The growth of electricity demand will continue 7-8%. Massive investments (80 billion US$).30% of generation expansion as IPP .Private sector have the opportunity .Private sector have responsibility Infrastructure Technology and Saudi work force

Conclusion

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Power Industry in Saudi Arabia Starts in the 50`s as 100%private utilities .Late 70`S consolidated into four major power companies (SCECO’s).Mid 2000 All operating entities merged in one company :

Saudi Electricity Company (SEC).The government involved as shareholder .

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Largest electric utility in the region in terms of capacity ,market capital and shareholder’s equity.

Serving the largest economy in middle east and 6million customers in 12000 cities ,towns and villages.

Owns 85% generation and 100% T&D and retail . Total assets over 60 bn US$. Annual revenues US$ 6bn with 6% annual growth. 50 GW installed capacity with 8% growth . (AA- ) credit rating

SAUDI ELECTRICITY COMPANY

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Scope of Operations

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Electricity is the basic infrastructure .

Power is capital-intensive infrastructure projects.

High growth in demand ( will continue 7- 8%).

High consumption for residential use (55%).

Low average load factor (60%) seasonal.

Inefficient old of generating units.

CHALLENGES

WHY IPP? Providing Financial Option for Highly Capital

Intensive Generation Projects .

Helping To Re-Direct Available Funds To T&D (Monopoly Activities)

Reallocation Expenditure From CAPEX To OPEX.

Avoiding Mismatch Between Medium Term Financing and Long Life PP Projects.

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SUCCESSFUL IPP ROJECTS

Two IPP Projects in process:1. Rabigh Power Plant (Awarded July 2009)

• 1200 MW / HFO• IPCOD APRIL 2012 • Investment 2.4 billion US$• IRR 8.5% with 20% for SEC

2. Riyadh Power Plant 11 (awarded last month)• 1800 MW / GAS• IPCOD APRIL 2013 • INVESTMENT 2.3 billion US$.• IRR 6.5% with50% for SEC

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Year Project Circuit Length KM

Tabuk-Tabarjal 300Umluj-Wadjh 250South-West 2nd line 500Jouf-Tabarjal 150

2015 Al-grayat- Tabarjal 2002016 Madinah-Tabuk DCLine 800

investment of 24 bn US$.

2013

2014

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Opportunities

Replace all the old generation units. Development of new power plants as an IPP.

Promote energy conservation initiatives. Load management programs (time of use tariff).

Introduce smart grid and smart meters . Encourage and support renewable energy.

Building more power generation capacity .

The growth of electricity demand will continue 7-8%. Massive investments (80 billion US$).30% of generation expansion as IPP .Private sector have the opportunity in these

expansions. The challenges are great, but the The challenges are great, but the opportunities are greateropportunities are greater

Conclusion

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SAUDI NATIONAL GRID by 2020

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First long-term electricity plan developed 1979.

Between 1980-2000 regional planning by SCECOS.

2003 SEC issued the first integrated power plan.

10- year forecast becomes more practical in KSA.

Near term 5-year plan window used today.

periodic update of the plan every tow years.

Low residential tariff (8 hallah /kwh) .

Low average load factor (55%) seasonal.

Inefficient old of generating units.

Saudi power plans