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Saudi Electricity SWOT and PESTLE Analysis

ID : 52467453| Nov 2018| 18 pages

COMPANY PROFILE -Saudi Electricity

Business Sector :Power

Operating Geography :Middle East

About Saudi Electricity :

Saudi Electricity Company is into generation, transmission and distribution of electricity within the Saudi kingdom. The company enjoys monopoly of entire transmission and distribution network in the country and manages around 37000MW of power. The company employs approximately 38000 people, as of 2017 and is one of the largest employers of Saudi Arabia. This conglomerate, established on 1st of January 2012, comprising of six primary departments, operations and control, maintenance, planning, engineering, projects, and technical services, in addition to two central departments, is fully-owned by the state government. Electric power generation is considered the company’s principal activity. It was born out of a transmission company, – National Grid SA –to operate the national grid. Geographically its operations are divided into 4 main sectors, The Central sector, The Eastern sector, The Western sector and The Southern sector.
Saudi Electricity Company’s mission is “to provide electricity and enough generating capacity using highly reliable and high readiness production techniques to meet the growing demand for electricity. The company achieves this with an optimum use of resources and investing all capabilities towards reaching its main purpose, i.e., decreasing the cost of electrical power production.” Saudi Electricity Company’s USP or unique selling point lies in being the biggest producer of Electricity powering the Kingdom providing employment to the largest number of people in the region.

Saudi Electricity Revenue :


50,615,317 thousands Saudi Riyals - FY ending 31st Dec 2017 (y-o-y growth 1.5% approx..)
49,860,998 thousands Saudi Riyals - FY ending 31st Dec 2016

Ownership / Major shareholders :

As of April 2018, the major shareholders of the company are as follows –
1) Government of Saudi Arabia (81.2%)
2) Donner & Reuschel AG (0.035%)
3) BlackRock Fund Advisors (0.0022%)
4) JP Morgan Asset Management (UK) ltd. (0.0008%)
5) Parametric Portfolio Associates LLC (0.0008%)

Competitive Analysis of Saudi Electricity

SWOT
PESTLE
The SWOT/TOWS Analysis for Saudi Electric is presented below:
Strengths
Weaknesses
1. Monopoly in production, transmission and distribution of electricity in Saudi Arabia.
2. Subsidised electricity tariff for residential consumers
1. Heavy dependence on state due to high government funding
2. Weak online transparency and disclosure of financial statements and board & executive management information
Opportunities
Threats
1. Increasing demand of electricity due to fast growth of economy
2. Move towards sustainable and intelligent infrastructure
3. Increase dependence on local industries for electricity generation
1. Regulatory environment has become more complex in Saudi Arabia
2. Recruiting and retaining qualified and talented manpower
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Detailed SWOT Analysis of Saudi Electricity

Strength

1. Monopoly in production, transmission and distribution of electricity in Saudi Arabia: The Company enjoys a strong monopoly in production, transmission and distribution of power in Saudi Arabia to agricultural, commercial, industrial and residential sectors. The company has a generation capacity of more than 74 gigawatts. It has 13 steam generation units and 9 gas generation units in power plants divided in four zones namely east, west, south and central. SEC has laid 5,78,000 km of overhead and ground networks of cables to cover the entire kingdom, added 150 new residential communities, 502,000 new customers, 34,674 new transformers giving 19,368MVA total capacity of distribution transformers and has electrified 9.1 million consumers till 2017. Also, it enjoys support from the government which makes it the largest producer and supplier of electricity in Saudi Arabia.

2. Subsidised electricity tariff for residential consumers: The council of ministers in Saudi Arabia are responsible for setting electricity tariffs of commercial, residential and industrial rates. The rate for residential stands at 18 halalah/kwh, 20 halalah/kwh for commercial and 16 halalah/kwh agricultural sector. But there is increasing pressure to increase the tariff rates due to plummeting oil prices and the economy suffering a steep downfall. This subsidy is mitigated by offering interest free loans, deferred payables to government and waiver of dividends on government shareholdings.

3. Strategic geographic location, availability of cheap raw materials: The country Saudi Arabia is an oil rich nation. It produces nearly 10.3 million barrels per day of crude oil. This oil is available for SEC at lower rate, so maximum electricity is produced by gas turbines. Geographically too, Saudi Arabia is surrounded by the GCC which is an oil rich belt. This lends it great advantage in reducing the company’s cost in procurement of raw material.

Weakness

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Opportunity

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Threat

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Major Competitors :

It is a monopoly therefore it has no competitors.

Key Business Segments / Diversification :

Saudi Electricity
Solar energy Wind energy Solar thermal energy Natural gas
Diesel Fossil fuel

Recent Acquisition / Mergers / Alliance / Joint Ventures / Divestitures :

Name
Business Segment
Year
Type
Objective/Synergy Achieved
GDF Suez, SojitzPower Utility2017Joint VentureSaudi Electricity has formed a $2.1 billion with GDF Suez and Sojitz to increase 11,000 megawatts of capacity.
General Electric2015Joint VentureWith this joint venture SEC wanted GE to train its staff to undertake O&M services.
Source: Company website and other reliable sources. The detailed table is available in the Complete Report.
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Copyrights and Disclaimer
Saudi Electric SWOT and PESTLE analysis has been conducted by Abhishek Majumdar and reviewed by senior analysts from Barakaat Consulting.

Copyright of Saudi Electric SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

Saudi Electricity SWOT and PESTLE Analysis
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