Several Saudi cities facing power disruptions

Saudi industrialists' lawsuit against SEC alleges repeated power outages, grid disruptions, and losses, seeking compensation. It cites generator failures, seasonal demand spikes, and poor reliability; SEC taps Aggreko for temporary power and GE Energy turbines.

Several Saudi cities and regions are faced with unplanned power disruptions over the past few days, owing to soaring temperatures in the desert kingdom and galloping peak summer power consumption.

The industrial sector is especially faced with breakdowns. Now angered by the frequent disruptions, inflicting huge losses and damage to the industry, a group of Saudi businessmen and industrialists are planning to sue the Saudi Electricity Company (SEC).

They said that the SEC had failed to fulfill its commitment to provide uninterrupted power supply.

Hamoud Al Hajla, the lawyer representing industrialists, was quoted as saying here that the utility company must pay compensation for failing to meet its obligations to its clients.

Ahmad Al Tuwaijri, former head of the economic committee at the Provincial Council of Al Qasim, is among those industrialists who are pursuing legal action against the utility company.

“We will file a lawsuit against SEC for its dereliction of duty in providing an uninterrupted power supply to our industries,” he said.

Meanwhile, sources at the Saudi Electricity Regulatory Authority said they had not received complaints about power disruptions.

“We will take stern action once we receive any such complaints,” the source said.

It is noteworthy that Minister for Water and Electricity Abdullah Al Hussain recently attributed power disruptions in some regions of the kingdom mainly to engine failure at three generators, while the utility pursued plant upgrades with GE to address reliability issues.

He ruled out claims for compensation, saying there were also other causes for which the ministry was not accountable, such as high temperatures and use of poor quality air conditioners by some consumers.

In the meantime, in order to bridge the gap between the rising demand and the available supply, the SEC as part of a broader investment program has contracted Aggreko PLC, a supplier of temporary power and temperature control, to provide 100MW of temporary power to help overcome seasonal power shortages in Saudi Arabia.

The contract is expected to last for a minimum of three months and will take to over 170MW the total capacity being supplied by Aggreko to Saudi Electric, as the utility invites bids for a 2,000 MW plant to bolster capacity.

Aggreko’s International Power Projects business which serves requirements of power utilities, governments, armed forces and major industrial users is supplying power at six sites in the Qassim region, north of the Saudi capital Riyadh, and elsewhere GDF Suez was named preferred bidder for a major plant.

Earlier the Saudi Electric Company also announced obtaining a SR4.1 billion (US$1.09 billion), 12-year loan from U.S. Export-Import Bank and Canada’s Export Development Credit (EDC) to fund it purchase from U.S.-based GE Energy to supply 23 gas turbines with a capacity to generate 2.9MW.

“This is the first direct loan to Saudi Electricity from the two banks,” the SEC’s Chief Executive Ali Saleh al-Barrak said at the signing ceremony.

Eximbank’s share of the loan is $912 million and the remainder is from Canada’s EDC.

The agreement coincides with tight credit conditions in the Saudi market due mainly to concerns over the global financial crisis and its repercussions on some firms in the kingdom, even as authorities analyze bids for a Riyadh power project to expand capacity.

“Local banks have done more than enough; they have also financed projects (involving Saudi Electricity). The field is open to local banks. The international financing gives greater depth and confidence to the company when it seeks financing from international banks,” Barrak told reporters.

Saudi Electricity is witnessing a rapid increase in its debts due mainly to poor efficiency at a majority of its power plants, amid proposed tariff reforms to save costs, heavily-subsidized price of electricity, unruly consumer behaviour and a rapid rise in power demand which stands at eight per cent annually.

Officials from the U.S. and the Canadian agencies said the agreement was supporting 29,000 jobs at GE-owned plants both in the U.S. and Canada.

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