Saudi Electricity Company (SEC) has signed an agreement with the Ministry of Finance to reclassify its net government liabilities.
The agreement comes as part of the recently approved sector-wide reforms, including financial, structural, and regulatory, orchestrated by a Ministerial Committee responsible for the restructuring of the kingdom’s electricity sector.
As per the terms of the financial agreement, SEC’s net government liabilities will be converted into a perpetual deeply subordinated equity-like financial instrument. This conversion is considered non-dilutive and will therefore have no impact on the Company’s existing shareholders’ stakes.
Lauding the Saudi leadership for the reforms, SEC Chairman Dr Khaled bin Saleh Al Sultan said: "The agreement and the electricity sector’s recent financial, structural and regulatory reforms are truly significant achievements. This milestone is a culmination of the tremendous efforts of the ministerial committee which is dedicated to and responsible for the restructuring of the kingdom’s electricity sector."
"The agreement and reforms are also a result of collective efforts from various entities involved in the electricity sector’s integration framework. These reforms will help the sector and SEC overcome several financial and structural challenges faced in the past, and will ultimately improve the quality of service to consumers and enhance the sector’s reliability and its ability to provide electricity transmission and distribution grids in order to further boost electricity generation efficiency levels," he noted.
The recently approved reforms will also help Saudi Arabia achieve an optimal energy mix for electricity generation, which is in line with the goals of Vision 2030, he added.
SEC has appointed HSBC Saudi Arabia as financial advisor and Abuhimed Alsheikh Alhagbani Law Firm in cooperation with Clifford Chance LLP as its legal advisors.
Al Sultan said with the signing of the agreement and the implementation of the approved reforms, in addition to the cancelling of the government fees imposed on SEC, it will be better able to fulfill its obligations and satisfy its dues which will in turn enhance its financial position.
It will further help SEC improve its ability to fund projects and enable the company to execute on its strategy to contribute to the development of a stronger, more sustainable, and diverse electricity sector, stated the top official.
It will also enable SEC to distribute dividends to all of its shareholders, he added.-TradeArabia News Service