(Adds CEO comments)
KHOBAR, Saudi Arabia, Nov 6 (Reuters) - State-controlled utility Saudi Electricity Co (SEC) reported a 6.8 percent increase in third-quarter net profit on Monday due to falling costs as the company improves efficiency.
SEC made a profit of 5.26 billion riyals ($1.40 billion) in the three months to Sept. 30, according to a bourse statement, up from 4.92 billion riyals a year earlier.
The utility, which the government is aiming to restructure to improve efficiency, cited higher operating revenues from seasonal sales.
SEC’s results are highly seasonal because of the big swing between power demand in winter and summer when high temperatures lead most homes and businesses to use more air conditioning.
SEC managed to save close to 8 million barrels of fuel this year due to greater efficiency and 25 million barrels of diesel, CEO Ziyad al-Shiha told Al-Arabiya TV.
Like most Saudi publicly listed firms, SEC adopted IFRS accounting standards in January. The company said some of its figures had been restated as a result.
In 2016, the Saudi government started to raise electricity, water and fuel prices to alleviate the burden of subsidies on its budget.
Saudi officials have, however, said the increase in prices will unlikely change the projected growth in demand.
A second wave of electricity and fuel price hikes is likely to be delayed. It was expected this year.
SEC has said the price changes would roughly balance out in its earnings, as the rise in costs associated with higher fuel prices would be offset by increased electricity sales.
The authorities have planned to break up SEC into four parts as part of a drive to improve its efficiency. The process is being reviewed and expected to see some progress next year.
Asked about the restructuring, Shiha said the matter was under consideration among different parties involved in the electricity sector.
Saudi Arabia is planning to diversify its energy mix by adding almost 10 gigawatts (GW) from renewable energy by 2023 to reduce the burning of crude oil it would rather export.
Last month, Saudi Arabia’s main sovereign wealth fund the Public Investment Fund (PIF) signed a memorandum of understanding with Softbank Vision Fund (SVF) to develop 3 GW of solar energy in 2018 through SEC.
Asked by Arabiya if the 3 GW would be part of the 9.5 GW the Saudi government has announced, Shiha said yes.
As part of the agreement between the PIF and SVF, the Saudi government is considering selling SVF a significant minority equity stake in SEC.
The PIF has a 74.3 percent stake in SEC whose assets are estimated to be $100 billion.
$1 = 3.7524 riyals Reporting by Reem Shamseddine; Editing by Louise Heavens and Mark Potter