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Tuesday, October 4, 2022

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SEC’s Sukuk: Focusing on renewable energy

Saudi Electricity Company (SEC), which holds a monopoly on the transmission and distribution of power in Saudi Arabia, has raised US$1.3 billion from a landmark international green Sukuk offering.

The Islamic paper — the first public green issuance in the GCC region — was oversubscribed four times, attracting investor interest from the Middle East, Asia and Europe, and receiving orders amounting to over US$5.2 billion.

The Sukuk offering features two tranches: five-year and 10-year green Sukuk. “The proceeds from the Sukuk sale will be exclusively used to finance eligible green projects that will help contribute to climate change mitigation,” SEC said.

Green capital projects include the procurement and installment of smart meters, creating potential energy consumption savings and potentially reducing or avoiding carbon emissions. Approximately 10 million smart meters are planned to be installed — a project that commenced in January 2020 and is expected to be completed by March 2021.

The construction and operation of the transmission and distribution infrastructure to connect renewable energy sources to the grid is also in the works, with nine energy plant projects in different cities scheduled to be completed by 2021.

The Sukuk issuance follows SEC’s Green Sukuk Framework, published in June 2020, that outlines the company’s strategy to significantly increase its transmission and distribution business and enhance its interconnectivity in line with the Saudi government’s Vision 2030 initiatives. SEC is also focusing on research and development projects with a particular focus on the development of renewable energy projects.

As at the end of 2019, the SEC Group accounted for 69.7% of the electricity generation capacity in the Kingdom. The Public Investment Fund of the Kingdom holds 74.3% of the company’s shares, Saudi Aramco holds 6.9% and the general public holds the remaining 18.8%.

Saudi Electricity Company’s Sukuk
US$1.3 billion

13th September 2020
IssuerSaudi Electricity Company
Issuance typeRegS senior unsecured international green Sukuk
Issue sizeTranche 1: US$650 million Tranche 2: US$650 million
Total number of Sukuk6,500
CurrencyUS dollar
Par valueUS$200,000
Profit rateTranche 1: 1.74% per annum Tranche 2: 2.41% per annum
TenorTranche 1: Five years Tranche 2: 10 years
Terms of redemptionRedemption on maturity and early redemption following a change of control event
ListingIrish Stock Exchange

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