Saudi Arabia’s wheel of reforms continues to turn despite the coronavirus disease (COVID-19) pandemic and its severe impact on the global economy.
The Kingdom has never stopped moving ahead toward achieving its ambitious Vision 2030 goals.
Saudi Energy Minister Prince Abdul Aziz bin Salman said that by bringing the country’s electricity sector under the control of his ministry, major structural and organizational reforms could now take place that would develop the industry and help toward meeting its sustainability and efficiency targets.
The sector, which includes the Saudi Electricity Co. (the largest electricity firm in the Middle East and North Africa region), has received a huge amount of support and supervision from the Saudi leadership for restructuring and financial reforms.
Under the auspices of the Ministry of Energy, the sector now has an historic opportunity for change in becoming an important contributor to the Kingdom’s economy, with positive results for everyone.
Backed by King Salman and Crown Prince Mohammed bin Salman, the move to bring the electricity sector under the ministry’s wing followed Saudi Arabia’s approval for the formation of the Supreme Committee for Energy Mix Affairs to monitor production and empower the renewable energy sector.
Since its formation at the end of March the committee, headed by the crown prince, has been working hard to raise efficiency levels and drastically reduce the amount of crude, fuel oil, and gas used to produce electricity.
Electricity revenues will be organized according to a new mechanism to ensure higher efficiency and quality service standards while achieving a balanced return.
The reforms will focus on generating electricity in the future from gas and renewable sources, slashing by up to 700,000 barrels per day the amount of oil and petroleum refined products used to produce electricity.
Reorganizing the electricity sector will ensure its sustainability, and lift a four decades’ old burden of debt from the shoulders of the Saudi Electricity Co. The restructuring of the sector is not a target in itself, but a means to achieve the relevant aims of Vision 2030 by clarifying and mapping out the way ahead for the electricity firm.
• Faisal Faeq is an energy and oil marketing adviser. He was formerly with OPEC and Saudi Aramco. Twitter:@faisalfaeq