Saudi Arabia may hire HSBC for breakup of SEC monopoly

Saudi Arabia hired HSBC Holdings (HSBA) to advise on a potential breakup of state-owned utility Saudi Electricity Company (SECO) into four independent power-generation companies, four people with knowledge of the matter told Bloomberg.

Electricity & Cogeneration Regulatory Authority, the industry regulator, plans to offer as much as 25 percent in each of the companies to international investors, the sources said, asking not to be identified as the information is not public yet.

The split would end the monopoly of Saudi Electricity, created after the merger of the kingdom’s power companies in 2000 and with a market value of $18 billion.

The largest Gulf Arab economy needs to spend $100 billion this decade to boost power-generation capacity by 50 percent, Saleh al-Awaji, Deputy Minister for Electricity told Bloomberg on March 28.

International investors could be given the right to build power plants as part of the plans to boost generation capacity, according to one of the people. HSBC is in talks with potential investors on the plans, sources said.

Saudi Electricity said on March 20 it received a 49.4 billion-riyal interest-free loan from the government to fund electricity projects.