RIYADH, June 21 (Reuters) - Saudi Electricity, the Gulf's largest utility by market value, said on Sunday it has obtained a 12-year loan worth 4.1 billion riyal ($1.09 billion) from U.S. Export-Import Bank and Canada's Export Development Credit (EDC).
The cash will fund the purchase by the state-controlled company from U.S.-based GE Energy of 23 gas turbines with a capacity to generate 2.9 megawatts from , Electricity's Chief Executive Ali Saleh al-Barrak said.
'This is the first direct loan to Saudi Electricity from the two banks,' he said at a signing ceremony. Eximbank's share of the loan is $912 million and the remainder is from Canada's EDC.
The agreement coincides with tight credit conditions in the Saudi market due mainly to concerns over the global financial crisis and its repercussions on some firms in the kingdom.
'Local banks have done more than enough, they have also financed projects (involving Saudi Electricity). The field is open to local banks. The international financing gives greater depth and confidence to the company when it seeks financing from international banks,' Barrak told reporters.
Saudi Electricity is witnessing a rapid increase in its debts due mainly to poor efficiency at a majority of its power plants, heavily-subsidised price of electricity, unruly consumer behaviour and a rapid rise in power demand which stands at 8 percent annually.
Officials from the United States and the Canadian agencies said the agreement was supporting 29,000 jobs at GE-owned plants both in the United States and Canada.
'It was GE that resorted to us,' Eximbank board member Bijan Kian told Reuters.
This is the first time the two agencies jointly finance a single transaction, EDC executives said./ENDS
(Reporting by Souhail Karam, Editing by Diane Craft) Keywords: SAUDILECTRICITY GE/LOAN
COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The cash will fund the purchase by the state-controlled company from U.S.-based GE Energy of 23 gas turbines with a capacity to generate 2.9 megawatts from , Electricity's Chief Executive Ali Saleh al-Barrak said.
'This is the first direct loan to Saudi Electricity from the two banks,' he said at a signing ceremony. Eximbank's share of the loan is $912 million and the remainder is from Canada's EDC.
The agreement coincides with tight credit conditions in the Saudi market due mainly to concerns over the global financial crisis and its repercussions on some firms in the kingdom.
'Local banks have done more than enough, they have also financed projects (involving Saudi Electricity). The field is open to local banks. The international financing gives greater depth and confidence to the company when it seeks financing from international banks,' Barrak told reporters.
Saudi Electricity is witnessing a rapid increase in its debts due mainly to poor efficiency at a majority of its power plants, heavily-subsidised price of electricity, unruly consumer behaviour and a rapid rise in power demand which stands at 8 percent annually.
Officials from the United States and the Canadian agencies said the agreement was supporting 29,000 jobs at GE-owned plants both in the United States and Canada.
'It was GE that resorted to us,' Eximbank board member Bijan Kian told Reuters.
This is the first time the two agencies jointly finance a single transaction, EDC executives said./ENDS
(Reporting by Souhail Karam, Editing by Diane Craft) Keywords: SAUDILECTRICITY GE/LOAN
COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.