Saudi Electricity Company Receives Approval for New WACC
In a significant development, the Saudi Electricity Company (SEC) has obtained approval for a new regulated weighted average cost of capital (WACC) of 6.65% for the upcoming regulatory period from 2024 to 2026. This represents a notable increase from the previous WACC of 6% that was in effect from 2021 to 2023. The approval was granted by the Minister of Energy, who also serves as the Chairman of the Ministerial Committee for the Restructuring of the Electricity Sector and SEC.
This adjustment in the WACC is a reflection of the anticipated positive impact on SEC’s revenues, driven by the growth of the regulated asset base. It is a strategic move that aims to support the company’s financial sustainability and future growth prospects, ultimately enabling SEC to provide electricity services with enhanced efficiency and reliability. Furthermore, the Mudaraba Agreement with the government ensures a fixed annual profit margin of 5.15% for the Mudaraba instrument during this period.
Eng. Khalid bin Hamad Al-Gnoon, the CEO of SEC, expressed his thoughts on the regulatory approval, emphasizing the dynamic regulatory framework that incentivizes operational efficiency and elevates customer service quality and reliability. He underscored that SEC’s strategic investment plans are grounded in robust regulatory and financial principles, aligning with global best practices to drive the sustainable development of Saudi Arabia’s electricity sector in alignment with Vision 2030.
The CEO also conveyed his gratitude to the Saudi leadership for their unwavering support of the electricity sector, particularly acknowledging the pivotal role played by the Minister of Energy in fostering the growth and development of SEC and the broader electricity market in the Kingdom.
