Saudi Electricity Embraces Sustainability With $2bn Green Sukuk Offering

Saudi Arabia’s Electric Transmission Monopoly Is Launching $1.2 Billion 

A document from a bank involved in the deal revealed that the 10-year tranche saw orders surpassing $9.2 billion, while the 30-year tranche drew over $6.2 billion in demand, both excluding interest from joint lead managers.

According to the report, the electric transmission monopoly of Saudi Arabia is launching $1.2 billion in 10-year green sukuk at a spread of 120 basis points over US Treasuries and $800 million in 30-year conventional sukuk at a spread of 205 basis points over UST.

The spreads have been tightened after higher-than-expected demand of $15.4 billion for both tranches, according to Reuters.

As further mentioned in the report, the sale marks the first time Saudi Electricity has issued bonds in more than two years. HSBC, JPMorgan, and Standard Chartered will serve as joint global coordinators for Saudi Electricity’s sukuk saleEstablished in 2000, SEC has monopolised the generation, transmission, and distribution of electric power in the Kingdom through its 45 power generation plants in the country.

SEC became the kingdom’s first issuer of green bonds in 2020 when it raised $1.3 billion from a sale of a two-tranche green sukuk, it stated.

Last month, it raised 10 billion riyals ($2.66 billion) via a syndicated loan from nine local banks, including the Saudi branch of Qatar National Bank.

In August last year, it raised $3 billion from another syndicated loan provided by 15 regional and international banks.

In its 2022 financial presentation last week, the SEC announced that it intends to allocate between $8 billion and $93 billion for its 2023 capital expenditure.

This is at least 10 percent higher than the electric power distribution firm’s 2022 capex, which stood at $73 billion.

Even though SEC did not provide a clear breakdown of the allocated amount, it is projected that expenditures in transmission and distribution infrastructure will be a priority, considering that they dominated the firm’s capital expenditures for the past three years.

In addition to this, SEC shed light on plans to further grow and expand its fleet, develop its distribution as well as transmission pipelines, and potentially achieve 23 percent automation within its distribution grid, said the report.

Between 2021 and 2022, the firm experienced a 0.6 percent surge in generation capacity, from 83,036 MW to 83,539 MW.

Similarly, total load also rose 1.8 percent in the same period to reach 65,301 MW in 2022, up from 64,161 MW in 2021.

On the other hand, the energy produced increased 2.6 percent to hit 191,964 GW in 2022, up from 168,985 GW a year earlier.

In 2022, SEC used 348 million barrels of oil equivalent, or mmboe, per day. This was an increase of 8.1% from 2021, when it used 332 mmboe per day.

As for the total number of substations, they rose to 1,209 in 2022 in comparison to the 1,190 reported back in 2021. Consequently, this accounted for a 2.8 percent increase in transformers’ capacity.

With regard to the number of registered customers, the company registered a 4 percent jump to reach 10.9 million in 2022, up from 10.5 million in 2021.

According to the report, the firm’s vision revolves around achieving integration of the environment, economy, and social issues into the firm’s corporate cultural and economic values in order to accomplish the greater objectives of sustainable development.