BUSINESS OPPORUNITIES

IN SAUDI POWER SECTOR

US-Saudi BUSINESS

OPPORTUNITIES FORUM CHICAGO April 28-

29, 2010

Ali Albarrak

President &C E O Saudi Electricity Company

Electricity Industry in Saudi Arabia Starts as 100%private ownership and operation.

Late 70`S consolidated into four major power co

(SCECO).

The government involved as major shareholder .

Mid 2000 All operating entities merged in one company

Saudi Electricity Company (SEC).

Incorporated from 10 operating utilities in 2000. Largest electric entity in the region in terms of

capacity ,market capital and shareholder’s equity. Owns 85% generation and 100% transmission ,

distribution and retail . Total assets over 50 billion US$. Annual revenues 6 Billion US$ . Annual growth 6%. 74% directly owned by the Government.

SAUDI ELECTRICITY COMPANY

Scope of Operations

High growth in demand ( 7- 8%).

Operate in a very supportive environment .

High credit rating (AA~ ).

Invest in productive assets.

Reliable and secured fuel supply.

government support.

SEC credit strength

DATANo of

customer ( Million)

Peak load (MW)

Available generation

(MW)

Transmission

(KM)

Energy (GWH)

2000 3.6 22000 22000 30000 114000

2009 5.7 43000 45000 47000 191000

Increase 2.1 21000 23000 17000 77000

Growth (%)

58% 95% 104% 57% 67%

GROWTH (2000 – 2009)

ACTIVITIES No of Projects COST )billion($

GENERATION 174 17.3

TRANSMISSION 291 9.3

DISTRIBUTION 176 2.1

TOTALS 641 28.7

projects Under Execution

Load forecast (gwatts) Load forecast (gwatts) 68.4

65.362.6

59.957.4

54.952.5

50.1

46.944

4138.1

35.2

32.530.5

28.22724.423.7

10

16

22

28

34

40

46

52

58

64

70

Series1

1.56.0%

2.67.8%

2.86.0%

2.74.5%

4.734.96

5.25.42 5.7

5.96.2 6.4

6.77.2

7.6

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

No OF CUSTOMERS (millions)

Generation Capacity generation capacity installed should meet the expected

7% increase in peak demand and a reserve margin.

90

74

59

41

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

2006e 2007e 2008e 2009e 2010e 2011e 2012e 2013e 2014e 2015e 2016e 2017e 2018e 2019e 2020e 2021e 2022e 2023e

SEC Installed & new capacity IWPP Installed capacity IPP Installed capacity SWCC Installed capacity Peak Load total capacity

Generation capacity (GW)

POWER SECTOR CHALLENGES

High annual growth in demand ( will continue 6-7%).

Extremely sharp daily and yearly load curve (air-

conditioning).

Replacement of inefficient old generating units.

High capital investment for expansion.

The need for private sector investment .

HOW TO MEET THE CHALLENGES ?

More investment in power generation,T&D .

Encourage the developers for more IPP.

Introduce the smart grid transmission system.

Promote energy conservation and load management.

Invest in renewable energy.

Year Project name Capacity (MW) Date in Service

Rabigh Steam Expansion 2,400 2014

PP-10 (Steam) 990 2014

Duba PP (IPP) 500 2014

Al-Shogaig PP 1,200 2014

Al-Jubail / Ras Al Zour 630 2015

Jeddah South 1,200 2015

Al-Shogaig PP 1,200 2015Al-Jubail / Ras Al Zour 1260 2016Al-Shogaig PP 800 2016Duba PP 250 2016Jeddah South 600 2016

Major Future Generation projects

2010

2011

2012

Year Project Capacity (MW) Date in Service

Al-Jubail / Ras Al Zour 630 2017Al-Ogair / Salwa PP 630 2017Jeddah South 600 2016Al-Ogair / Salwa PP 1260 2017Jeddah South 600 2018Al-Ogair / Salwa PP 630 2018Al-Shogaig PP 400 2017Al-Ogair / Salwa PP 1,260 2019Al-Shogaig PP 400 2018

2016 Al-Jubail / Ras Al Zour 1,260 2020

total capacity: 25000 MW capital Cost : 50 Bln US$

Major Future Generation projects

2013

2014

2015

IPP PROGRAM IN SEC

SEC will Continue to encourage private investors

to invest in Future Generation projects .

30 – 40 % of Future generation will be IPP(BOO).

SEC partnership will be 10%-50% in the equity.

Long term power purchase agreements (20years)

With reasonable return on investment .

WHY IPP?

Providing Financial Option for Highly Capital

Intensive Generation Projects .

Helping To Re-Direct Available Funds To T&D

(Monopoly Activities)

Reallocation Expenditure From CAPEX To OPEX.

Avoiding Mismatch Between Medium Term

Financing and Long Life PP Projects.

SUCCESSFUL IPP ROJECTS

Two IPP Projects in process:

1. Rabigh Power Plant (closed financialyJuly last yea)• 1200 MW / HFO• IPCOD APRIL 2012 • Investment US$ 2.4 billions

2. Riyadh Power Plant 11 (financial close next month)• 1800 MW / GAS• IPCOD APRIL 2013 • INVESTMENT US 1.5 billions.

18

IPP FUTURE OPPORTUNITIES

NAME OF IPP PROJECT

CAPACITY (GW)

PRIVATE SECTOR

SHARE %

PROJECT COMPLETION

QURAYYAH 2 80 2014

DHEBA 1.6 80 2015

SHUQAIQ 1.6 80 2015

ALOGAIR 2.4 80 2016

JEDDAH SOUTH

2.4 80 2017

RAS ALZOUR 2.4 80 2019

) INVESTMENTS OF $20B (TO BUILD 12 GW

SAUDI NATIONAL GRID by 2018SAUDI NATIONAL GRID by 2018

Year Project Length KM Date in Service

HAIL-ALJOUF-380KV 300 2014

ASIR_NAJRAN 380KV 400 2014

GAISOUMAH -ALFADLI 380 KV 250 2014

BISHA_DAWASIR 380KV 500 2015

5th 380 KV LINE TO CENTRAK 400 2015

MADINAH-HAIL 360 2015RIYADH-JEDDAH DC line 800 2016TABUK-TABARGAL 600 2016WEAST _SAUTH 2ND LINE 500 2016

Future 380KV transmission lines projects

2010

2011

2012

Year Project Circuit Length KM

Tabuk-Tabarjal 300Umluj-Wadjh 250South-West 2nd line 500Jouf-Tabarjal 150

2015 Al-grayat- Tabarjal 2002016 Madinah-Tabuk DCLine 800

total capital cost 24 billion $.

Future 380KV transmission lines projects

2013

2014

BUSINESS OPPORTUNITIES

Material and Equipment supply.

As an EPC contractor .

Local manufacturing .

Participate in IPP projects .

Opportunity in consultation and engineering.

Invest in future energy retail.

The growth of electrical energy demand in Saudi Arabia will continue 6-7%.

Power projects needs 80-90 billion US$ as capital investments for the next 10 years .

Private investors have the opportunity to take 30-40% of the generation projects as a BOO projects.

US companies have the opportunity to take part both in EPC and IPP.

There are oportunities in Consultation , Engineering and Services in power sector.

Conclusion