RIYADH, — Saudi Electrical Industries Company (EIC) has approved a SAR 150 million ($40 million) factory to manufacture power transformer components, positioning itself to capture more of Saudi Arabia’s electrical equipment supply chain as the kingdom expands its power network.
The company’s board approved the project on October 25. The facility will manufacture tanks and radiators for medium-, high- and extra-high-voltage transformers, becoming the first of its kind in the kingdom to produce these components across all three categories, according to EIC.
The investment comes amid substantial electricity infrastructure expansion. Saudi Energy added 131 transmission transformers and 49 substations during the first half of 2026, while its transmission network grew 4% to more than 108,000 circuit kilometres.
The expansion provides a broader market opportunity for electrical equipment suppliers, although EIC has not disclosed customer commitments or projected orders for the new facility.
A Growing Business Faces Supply Pressures
EIC’s revenue rose 25.2% to SAR 2 billion in the first nine months of 2026, while net profit climbed 37.7% to SAR 580 million.
However, the profit figure included a SAR 26.1 million one-off refund of a previously paid regulatory fine. Third-quarter revenue also fell 11% from the preceding quarter as project delivery delays disrupted sales, while higher shipping and insurance costs weighed on profitability.
The new factory could provide Saudi transformer manufacturers with a domestic alternative to imported components, potentially improving sourcing flexibility and reducing exposure to international logistics disruptions.
But those benefits remain unquantified. EIC has not announced the facility’s production capacity, expected cost savings or customer contracts.
The Investment Test
The SAR 150 million project is equivalent to approximately 7.5% of EIC’s revenue for the first nine months of 2026, highlighting its scale relative to recent sales.
EIC plans to fund construction through internal resources and bank facilities. Work is scheduled to begin in early 2027, with commercial production expected in the third quarter of 2029 and a positive financial impact from the fourth quarter.
No construction contract had been awarded when the project was announced.
For Saudi Arabia, the factory could strengthen domestic manufacturing of components used in electricity networks. For EIC investors, the key questions are whether it can secure sufficient orders, compete with imported products and control costs during the development period.
With production volumes and projected returns undisclosed, the factory’s commercial value will depend on turning Saudi Arabia’s expanding power-grid investment into profitable long-term demand.
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