RIYADH OPEC giant Saudi Arabia needs investments of more than $116 billion in its electricity sector over the coming 23 years to match increased demand from a rapidly growing population, an economist said Saturday.

Said al-Shaikh, chief economist of the National Commercial Bank, said current electricity production capacity of 23,438 megawatts was projected to more than double by 2023 to over 50,000 megawatts.

The population of Saudi Arabia was also projected to double to 38.4 million people by 2023 and the annual increase in electricity demand was estimated at 4.5 percent, Shaikh told AFP.

Shaikh's projections were based on estimates by the Ministry of Industry and Electricity.

More than half of the required investments will be needed for generation (54 percent), 29 percent for transmission and 17 percent for distribution, he said.

Only Saudi nationals can invest in the transmission and distribution sectors, but generation, which will require an annual investment of $2.74 billion annually for the next 23 years, is open to foreigner investors.

Saudi Arabia last October hiked the average electricity tariff rates for residents from 2.1 cents per kilowatt/hour to 4.5 cents per kilowatt/hour by raising charges on high consumption groups and leaving lower groups unchanged.

But Shaikh said that even at this rate, the electricity sector can barely break even after sustaining heavy losses during the past several decades because of the heavily-subsidized rates.

Before the increase, the combined losses of the Saudi power sector reached 48 percent of total sales revenues and the total debt outstanding of the power sector reached $26 billion at the end of 1999.

The Saudi electricity company was formed last year with a capital of nine billion dollars through the merger of several smaller companies, following the government decision to cut subsidies.

Saudi Arabia will get part of its needed power through the so-called "gas initiative", a huge multibillion project to explore and produce gas from three giant natural gas fields with foreign investments.