Fitch upgrades Saudi Electricity to 'A+'

Logo of Saudi Electricity Co. (SEC)

Fitch Ratings upgraded Saudi Electricity Co.’s (SEC) long-term foreign and local currency issuer default rating to “A+” from “A”, with stable outlook, in line with Saudi Arabia’s sovereign credit rating (KSA, A+/Stable), according to a statement by the rating agency.

The rating revision reflected several key factors, including decision-making and oversight, precedents of support and preservation of government policy role, in addition to SEC's 81% ownership by government and the utility’s efforts in energy sustainability and decarbonization.

CEO of Saudi Electricity Khaled AlGnoon said that this positive rating is a testimony to the efforts and investments made by the company to enhance the reliability and efficiency of the electrical network. This also mirrors the company's strong financial record, its adoption of the best governance practices, and consistency with the directives of the Ministry of Energy and the Kingdom's sustainable electricity strategy. SEC is committed to maintaining excellence in service and accomplishing its pivotal role in providing electricity for the future of the Kingdom.

He added that the new rating highlights SEC's stable financial record, which was supported by transferring SAR 168 billion from the company’s liabilities into an equity instrument similar to shares, as well as improving the ability to withstand financial leverage, clarity of cash flows in the current business model, and the firm's vital role in the energy plans of the Kingdom.

During Q1 2024, the company intensified its growth plans with an ambitious capital spending program worth SAR 10.5 billion in generation, transmission and distribution projects, confirming its commitment to accelerating investments in the network infrastructure, with the aim of meeting the expected increase in demand for electricity.

Meanwhile, SEC posted SAR 15.9 billion in revenue, a 9.1% increase in earnings before interest, taxes and depreciation and amortization (EBITDA) to SAR 6.8 billion, and an 87% leap in net profit to SAR 897 million, compared to the same quarter of the previous year.