State-controlled Saudi Electricity Co (SEC) said on Monday it had finalised an Islamic financing worth 5 billion riyals ($1.33 billion) with four local banks to finance projects in the kingdom.
The 15-year murabaha financing was provided by Saudi Arabia's largest lender by assets, the National Commercial Bank, alongside Saudi British Bank (SABB), Samba Financial Group and Banque Saudi Fransi, the firm said in a bourse statement.
"The loan will be used to finance projects with the goal of raising power generation capacity, transport and distribution in all areas of the kingdom to meet rising demand for electricity due to economic and population growth," the statement said.
SEC has projects worth 80 billion riyals under construction and expects to need more loans to finance current and upcoming projects, Ali al-Barrak, chief executive of SEC, told Reuters.
"SEC's plan is to finance part of our present and future projects through loans and sukuk. I don't know when, but it will be decided by the cashflow needs over time. Whenever we need we will go to the market," he said.
The world's biggest oil producer has seen its population grow to more than 27 million and is seeing a rise of about 8 percent annually in electricity demand.
SEC has said it used about 274,000 barrels per day for electricity production in 2009. Half the electricity production in the kingdom uses natural gas as a feedstock.
Pricing for the loan is "within the market (range) for Saudi, which is suitable for the company and lenders," Barrak said, declining to be more specific.