Fitch Ratings Elevates Saudi Electricity Company To A+ Credit Status

The Saudi Electricity Company (SEC) has received an upgraded rating from Fitch Ratings, moving from "A" to "A+", aligning with the national sovereign rating. SEC CEO Eng. Khaled Al-Gnoon expressed satisfaction with this development, attributing it to the company's ongoing efforts to enhance the reliability and efficiency of the electrical grid.

Al-Gnoon stated, "This improved rating is reflective of our best-in-class governance, our close alignment with the Ministry of Energy and the Kingdom's decarbonization strategy, and our solid financial profile. We are committed to maintaining our service excellence and fulfilling our pivotal role in powering Saudi Arabia's future."

Fitch Ratings highlighted several factors contributing to the upgrade. These include SEC’s robust decision-making processes, strong government support, and alignment with national policy. The government’s 81% ownership and strategic oversight were also noted as significant elements.

The rating agency stated, "The upgrade recognizes SEC’s stable financial profile, which is secured by the conversion of SAR168 billion of SEC's liabilities into equity-like instruments, the company’s leverage headroom and strong cash flow visibility, and its crucial role in the Kingdom's energy plans."

In Q1 2024, SEC ramped up its growth plans with a capital expenditure program deploying SAR10.5 billion in investments across generation, transmission, and distribution projects. This move reaffirms the company's dedication to accelerating investments in its grid infrastructure to meet the expected increase in electricity demand.

SEC reported SAR15.9 billion in revenue for the first quarter of this year. This marks a 9.1% year-on-year increase in EBITDA, reaching SAR6.8 billion, and an 87% year-on-year increase in net profit, totalling SAR897 million.

Strategic Alignment

The upgrade by Fitch Ratings underscores SEC's alignment with Saudi Arabia's broader energy strategy. The company's role in the Kingdom's decarbonization efforts is pivotal, supported by its strong financial standing and government backing.

This positive development reflects SEC’s commitment to maintaining service excellence while supporting Saudi Arabia's future energy needs. The company continues to focus on enhancing its grid infrastructure and ensuring reliable electricity supply across the nation.

With inputs from SPA