PUBLIC Electricity Corporation (PEC) is the state-owned power company in Yemen. The company enjoys strong government support and is the sole integrated electric utility and the main supplier of electrical power in Yemen. However, its poor infrastructures remain an area of concern for the company. Nevertheless, the company can explore growth opportunities arising from the rising electricity demand in the region by developing and expanding its power infrastructures. However, threats from political unrest are among the major challenges for the company, says Globaldata in its analysis of the company.

STRENGTHS
Government ownership: PEC is a wholly-owned by the government of Yemen. The company gets significant financial and technical support from the government. In addition, the government also guarantees in clearance of large proportion of the company’s debt. A strong government support enables the company to carry out its operations efficiently.

Integrated energy company: PEC holds its presence across the energy value chain, engaged in the business of generation, transmission and distribution services. PEC has a capacity of around 900 MW which is distributed among the stream fired combined plants and from the diesel stations working in various towns linked with the unified net power systems. The company under its generation portfolio operates three steam stations, in Mocha, in Ras Katneen and in Hiswa. PEC’s base-load generation capacity is stepped up to 132 kV and transmitted via 132 kV transmission lines to 132/33 kV substations situated at major cities in Yemen. Strong presence in the energy value chain provides the company opportunities across all of these areas and scope to increase its business and revenues further.

Strong foothold in the market: PEC is the sole integrated electric utility and the main supplier of electrical power in Yemen. It is a major player in the domestic market and plays a vital role in providing the power supply to the nation. Currently, the company generates around 900 MW of electrical energy from a handful steam and diesel power plants. The company’s load generation capacity is stepped up to 132 kV and transmitted via 132 kV transmission lines to 132/33 kV substations situated at major cities in Yemen. Besides, PEC under its distribution network services operates Al Heswa and Taiz sub-stations for efficient distribution of electrical energy. In addition, the company also erected new sub-stations in Al Raheda, Al Habilayn, Al Turba, Al Dhal’a and Nobat Dukaim for rendering electrical energy.

WEAKNESSES
Lack of proper infrastructure: The present capacity of the company’s generation system is not sufficient to meet the electricity demand in the country. Yemen’s whole energy output is only 1,150 MW, of which, 650 MW is generated by the old power stations forming the National Electric Network (NEN), 300 MW by individual power stations in isolated areas like Hadramout and Al Mahra, and the remaining 200 MW are imported from Aggreko company. The company’s generation system and transmission network has low availability.

OPPORTUNITIES
Focus on renewable energy: The company can focus on supplying electricity generated from renewable energy sources. A 60 MW wind power plant in Makkah city is expected to come online. Following this, new wind projects and other renewable energy source projects are expected to come online in order to increase the electricity generation. Further, the government and the private sector investors plan to set up a wind power plant for a total cost of $320 million to generate 182 MW of electrical energy. Such initiatives will also help the company to reduce its dependency on the price of thermal energy sourced power stations.

Increasing demand for electricity: Electricity consumption increased at a CAGR of 8.5 per cent between 2000 and 2011 increasing from 2,260 GWh to 5,540 GWh. With the expected increase in demand for electricity in the country, total electricity consumption is expected to increase at a CAGR of 2.3 per cent, with an expected consumption of 5,705.4 GWh by 2020. Also, a significant portion of the country is still un-electrified. This increasing demand for electricity gives an opportunity for the company to enhance its position in the domestic electricity market.

THREATS
Environmental laws and regulations: The company’s businesses are regulated by various national and local environmental laws and regulations concerning its operations, products and other activities in the various jurisdictions. The growing importance on climate change and emphasis on reducing carbon emissions is increasing the role of various renewable sources of energy. The company’s earnings can be affected by the regulations concerning emissions, fuel consumption and safety.

Political unrest: The electricity infrastructure in the country has been damaged by years of conflict. Moreover, the distribution network in the country is inadequate. It is estimated that only 45 per cent of the population has access to electricity and those that do often suffer from frequent power blackouts. Approximately 45.5 per cent of the installed capacity in the country is expected to require upgrade/rehabilitation work in the near future. The country has very high transmission and distribution loss.

Volatility in electricity prices: The prices of electricity are subject to huge fluctuations in the utility industry. The volatility in electricity prices is driven by various factors such as demand for electricity, the number of market participants, price and availability of fuel for thermal generating plants, and disruption of or constraints on transmission facilities.