Saudi Electricity aims to use new credit facility to fund projects in 2023, 2024: CFO

Abdulaziz AlMuhaiza, CFO of Saudi Electricity Co. (SEC)

Saudi Electricity Co.’s (SEC) $3 billion financing agreement signed with several banks will finance its investment projects for the remainder of the current year and part of 2024, said CFO Abdulaziz AlMuhaiza. 

In an interview with CNBC Arabia, the CFO added that the company aims to diversify its financing sources by using multiple banks and methods, or through sukuk and bonds, international export banks, or the local financing market. 

SEC has invested about SAR 30 billion annually in recent years and expects to double its investments in the next five years to meet the growing demand for electricity in the Kingdom. 

The company's credit rating is equal to the Kingdom's rating, which helped it secure financing at the lowest costs and strengthened its credit record, AlMuhaiza said, noting that the interest rate is variable. 

SEC has huge expansion plans for 2024 and beyond, and will have to resort to debt markets to finance these projects. The rise in interest rates is a concern for the company, but it is trying to optimize its free cash flows and avoid loans if possible. 

The volume of cash flows is variable and reaches SAR 20 billion, in addition to seasonality and reliance on working capital financing, the CFO added. 

The company operates under a specific regulatory framework in accordance with the electrical system, which determines its required revenue, he said, adding this help SEC to obtain the necessary funding for its projects. 

 AlMuhaiza expects the company to continue issuing green sukuk whenever market conditions allow.  

According to data available on Argaam, Saudi Electricity will sign a $3 billion (SAR 11.25 billion) dollar-denominated international syndicated financing agreement with Dubai Islamic Bank, Kuwait Finance House, Mashreq Bank, and Saudi National Bank (SNB) at the ongoing Future Investment Initiative (FII) in Riyadh.