Saudi Electricity to Convert Government Liabilities Worth Around USD 45 Billion into Shariah-Compliant Perpetual Instrument

Saudi Electricity Company (SEC), Saudi Arabia’s main power generation and distribution company, has signed an agreement with the Saudi Government to convert state liabilities valued at SAR 167.92 billion (USD 44.77 billion) into a subordinated Shariah-compliant perpetual financial instrument, according to media reports.

Based on a Tadawul statement issued by SEC, the conversion will be considered as the world’s largest Islamic transaction to be executed, and the Shariah-compliant instrument will carry a 4.5% profit rate and a redemption option. The conversion is considered as non-dilutive and will not impact SEC’s existing shareholders’ stakes.

The Shariah-co...