Saudi Electricity Company (SEC) announces signing the Sale and Purchase Agreement for the transfer of ownership of SEC’s 100% shareholding in SPPC to the government
|Introduction||This announcement is in reference to Saudi Electricity Company’s (SEC) announcement published on the website of the Saudi Stock Exchange (Tadawul) on 29/11/2021 and corresponding to 24/04/1443 related to receiving a transmittal which states that the Council of Ministers has issued a resolution approving the carve-out of the Saudi Power Procurement Company (SPPC), a wholly owned subsidiary of SEC and the transfer of its ownership to the government (kingdom of Saudi Arabia). It is also in regard to the resolution of SEC’s 23rd Ordinary General Assembly convened on 30/01/2022 and corresponding to 27/06/1443 whereby SEC’s Board of Directors were delegated the authority to undertake all necessary legal procedures to sell and transfer SEC’s entire ownership in SPPC to the government . SEC announces that on 29/06/2022 and corresponding to 30/11/1443, SEC and SPPC signed a Business Transfer Framework Agreement (BTFA), which covers and satisfies all the legal arrangement of sale and transfer of business assets, liabilities and contracts related to SPPC as wholly owned subsidiary by SEC to SPPC as an independent company wholly owned by the government, effective from 29/06/2022 and corresponding to 30/11/1443. |
Based on the aforementioned and on the same date as the BTFA, SEC and SPPC also entered into Energy Conversion Agreements and a Bulk Supply Agreement as well as novation of Fuel Supply Agreements, and Fuel Transportation Agreements from SEC to SPPC effective from 1/7/2022 and corresponding to 2/12/1443. With that, and on the same date as the BTFA, SEC (Seller), SPPC and the Ministry of Finance (Buyer) entered into a Fuel Inventory Sale Agreement, which stipulates that the Buyer must pay the net book value of the fuel inventory to SEC according to the Seller’s financial statements as of 30 June 2022.
Furthermore, and also inked on the date of the BTFA, SEC (Seller) and the government, represented by Ministry of Energy and Ministry of Finance (Buyer), signed the Share Sale and Purchase Agreement for the transfer of ownership of SEC’s 100% shareholding in SPPC to the government. The sale price shall be equivalent to the book value of SPPC’s net assets as end of Q2 2022.
SEC does not expect the carve-out of SPPC to have adverse financial impact on its business, as SPPC does not hold any material tangible assets at the date of the carve-out.
|Previous Announcement||Saudi Electricity Company (SEC) receiving a letter states that the Council of Ministers has issued a resolution approving the carve-out of the Saudi Power Procurement Company (SPPC), a wholly owned subsidiary by SEC, and transferring its ownership to the government|
|Date of Previous Announcement on Tadawul's Website||2021-11-29 Corresponding to 1443-04-24|
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|The costs associated with the event, and if they have changed or not with indication of the reasons.||N/A|
|Additional Information||This step comes within the comprehensive regulatory framework to restructure the sector, and is an extension to the regulatory reforms announced by His Royal Highness the Minister of Energy in November 2020, which was a culmination of the tremendous efforts of the ministerial committee dedicated to and responsible for the restructuring of the Kingdom’s electricity sector, with oversight and support from the Supreme Committee for Energy Mix Affairs for Electricity Production and Enabling Renewable Energy Sector, headed by His Royal Highness, Prince Mohammed bin Salman bin Abdulaziz Al Saud, the Crown Prince, Deputy Prime Minister, and Chairman of the Council of Economic and Development Affairs. |
SPPC will be responsible for the competitive tendering of renewable and conventional energy projects, to keep pace with the growth in energy demand, manage commercial agreements for the purchase and sale of energy, rationalize fuel consumption, and increase efficiency. This will lead to higher transparency in the commercial relationships among parties operating in the electricity sector, and will lead to achieving many of the Kingdoms goals in reducing reliance on liquid fuels and raising the level of environmental compliance. It will also enable the production of electricity from renewable sources with the aim of reaching the optimal energy mix for electricity production, in line with the objectives of the Kingdoms Vision 2030.
In this regards, the transfer of ownership of the SPPC to the government will contribute to raising the efficiency and improve the overall service in the electricity sector, which will benefit consumers and producers alike.
It is also worthwhile to note that Moody’s Investors Service has given SPPC a credit rating of (A1) with a stable outlook, which is on par with the sovereign credit rating of the Kingdom. This reflects the transparency and effectiveness of the regulatory framework. It also demonstrates the strong support shown by the government to SPPC.
The Capital Market Authority and Saudi Exchange take no responsibility for the contents of this disclosure, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this disclosure, and the issuer accepts full responsibility for the accuracy of the information contained in it and confirms, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts or information the omission of which would make the disclosure misleading, incomplete or inaccurate.