Higher tariffs for government, commercial and industrial users of Saudi Electricity Company (SEC), applicable from July 1, will result in a 300 per cent increase in profitability for the company, NCB Capital says, according to a Reuters report.

The tariff hike will add SR3.2 billion ($853.3 million) to SEC’s annual revenues, according to NCB Capital. The increased revenue will mostly flow to net income and profitability will surge because of no impact on costs.

“In 2009, Saudi Electricity’s net income was SR1.1 billion which means that the change in revenue, which we expect to flow directly to net income, will result in up to 300 per cent increase in profitability,” NCB Capital said.

Shares in Saudi Electricity were up 3.4 per cent immediately following the announcement of the change in tariffs, which excludes households.

“We think the stock’s price should increase significantly due to the expected impact of the change in tariffs on profitability,” NCB Capital said.

NCB Capital is affiliated to state-run National Commercial Bank.