SEC Q1 loss after Mudaraba widens to SAR 1.4 bln

The utility’s net profit before deducting Mudaraba instrument distributions declined to SAR 480 million in Q1 2023, compared to SAR 1.51 billion in Q1 2022.

Losses increased as electricity sales fell by SAR 439 million year-on-year (YoY), due to lower sold volume and a change in the sales mix. Operation and maintenance costs and financing costs together increased by SAR 1.24 billion YoY.

This was partially offset by a rise of SAR 250 million in the required revenue recognized during Q1 2023, compared to the same quarter of the previous year. SEC also reported higher net other income and expenses, along with lower provisions for receivables from consumption of electricity and other receivables.

The change in purchased power and fuel costs YoY reflects the implementation of the Energy Conversion Agreements (ECAs), the Bulk Supply Agreement (BSA), and the transfer of Fuel Supply Agreements from SEC to Saudi Energy Purchase Co. (SPPC) as of July 1, 2022.

As per the BSA, the bulk supply tariff is lower during the winter season (from January to April and October to December) and higher during the summer season (from May to September), which results in a variation in purchased power tariffs during the fiscal year.

On the contrary, the tariff under which electricity is sold to consumers along with the ECA revenue shows no significant seasonal variation. To account for the purchased power costs, SEC applies the bulk supply average tariff, to match the revenue recognized. The bulk supply average tariff is calculated on an annual basis.

Sequentially, Q1 2023 net losses after Mudaraba deepened from SAR 190.61 million.

Total shareholders’ equity, no minority interest, reached SAR 89.6 billion as of March 31, 2023, compared to SAR 85.8 billion a year earlier.

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