Saudi Electricity: Debt Write-Off Clears Way For Break-Up

State-led utility SEC reported a major and unseasonal swing into profit in Q1. However, the data includes a big accounting adjustment that may represent preparation for a planned break-up.

Saudi Electricity Company (SEC) reported a record net quarterly profit of SR4.95bn ($1.32bn) in the first quarter of 2017, a quarter in which it typically makes a loss. However, the income boost appears to be the result of a reclassification of debt, with an accompanying adjustment to the credit balance.

In its Q1 financial results report posted on the Saudi Stock Exchange (Tadawul), SEC says the quarterly net profit was “significantly positively impacted” by “a substantial reversal of accrued historical municipalities’ fees of SR6.1bn, post issuance of a royal decree to cancel municipalities’ fees in February 2017.”

The accounting adjustment is likely a part of government’s preparations for full privatization of SEC, which is owned roughly 74% by government and 7% by Saudi Aramco, with around 19% of the company’s shares being traded on Tadawul. (CONTINUED - 805 WORDS)

DATA INSIDE THIS ARTICLE

chart 1: Write-Off Boosts Sec To Unseasonal Q1 Profit (Sr Bn)
chart 2: Sec Annual Net Profits (Sr Bn)
chart 3: Sec Generating Capacity* (Gw)