Higher fuel prices weighed on MARAFIQ’s energy segment profit in 2024: CEO

Mohammed Al-Zuabi, CEO of The Power and Water Utility Company for Jubail and Yanbu (MARAFIQ)

Mohammed Al-Zuabi, CEO of The Power and Water Utility Company for Jubail and Yanbu (MARAFIQ), said the most significant challenge faced by the company in 2024 was higher prices of fuel used in production, which significantly impacted the profitability of the energy segment.

Commenting on 2024 financials, the CEO said the effect of increasing fuel prices could have been much greater without the company's efforts to mitigate this impact by leveraging all opportunities to enhance productivity, improve the reliability of plants, and continue providing the best services, aligning with the aspirations of customers.

Regarding the intensive tariff on electricity, the company's management exerted all efforts through discussions with the regulators to clarify the financial impact on MARAFIQ if the intensive electricity consumption tariff were applied to qualifying operational facilities and the delay in the mechanism to compensate for the expected reduction in electricity revenues was addressed in full compliance with the issued decision.

"This was done to ensure the company's financial position remains unaffected by revenue shortfalls and to safeguard cash flows," Al-Zuabi said.

"2024 experienced exceptional circumstances replete with challenges that tested us and having the opportunities that inspired us," the CEO said.

He added that despite the rapid changes in the business environment, MARAFIQ once again proved its ability to adapt and persisted through adopting a strategic approach centered on innovation, enhancing operational efficiency, and investing in a sustainable future.

Since regulatory bodies have not announced a mechanism to compensate for the shortfall in the energy segment revenues, the company's management considered it necessary to comply with applicable accounting standards through recognizing an impairment provision for trade receivables and disclosing this in its financial statements for the years 2023 and 2024.

"The company's management affirms that these developments are beyond its control," the top executive said.

As for the financial aspects, the company achieved a 7.83% growth in its revenues compared to 2023, which positively contributed to mitigating the effects of rising fuel prices and additional provisions related to revenue discrepancies due to the electricity consumption tariff for high-demand users.

"However, due to the financial challenges, no cash dividends have been approved for the second half of 2024," Al-Zuabi said.

The company reaffirmed its commitment to preserving and maximizing shareholder rights through working with regulatory authorities to resolve all associated challenges. The management remains committed to continuously improving production efficiency, increasing the reliability of the stations, and continuing to provide the best services.

MARAFIQ reported a net profit of SAR 17.2 million in 2024, a decline of 97% compared to SAR 587 million a year earlier. In Q4 2024, the company swung to a net loss of SAR 277 million on making an additional provision, according to Argaam data.