Power outages have hit industrial plants in Saudi Arabia's second-largest city and could force temporary closures, an executive from Jeddah's chamber of commerce said.

Like its Gulf neighbours, the kingdom is experiencing rapid power demand on the back of a petrodollar-fuelled economic boom. Demand peaks in the summer when air conditioners work at full throttle to counter soaring desert temperatures.

Jeddah, the Red Sea port and commercial hub of the kingdom, has faced power cuts in its industrial zone for up to five hours a day this month, factory managers told Reuters. The industrial zone is home to over 450 plants.

Local plants are estimated to have lost between 500 million and 900 million riyals ($133 million-$240 million) this month due to the outages, said Sameer Murad, head of the factory committee at the Jeddah Chamber of Commerce and Industry.

"The power cuts are ... resulting in huge setbacks in the manufacturing industry in Jeddah and if this situation continues some factories might shut down," he said.

"Medicines are produced in plants that require sterilised environments using environment control equipment for filtering, air conditioning and sterilisation. When they cut power the whole environment is ruined."    

State-run Saudi Electricity Company (SEC) told industrial clients before the summer they needed to change production patterns, as power capacity would be insufficient to supply them during peak demand time, Abdulsalam Al-Yemni, the vice president of general affairs at SEC, told Reuters.

"This is a temporary problem resulting from increased demand for electricity during the summer ... and the increased number of construction projects," Yemni said.

To help meet rising demand, the biggest Gulf utility by market value is investing 38 billion riyals to raise capacity in the western region of the kingdom to 18,000 megawatts from 12,000 MW by 2012, Yemni said.

SEC, with 37,000 MW of capacity from some 45 plants, said this month it wants to sell about 5 billion riyals in Islamic bonds to expand.

A local glassmaker located in the industrial zone said it had to cut output by 30 percent because of the power supply problems.

"We've lost about $900,000 since the crisis began," said Ayman Khalil, director-general of Mahmoud Saeed Glass Industry Co. The firm had ordered generators to supplement supply from the power grid.

"They are destroying the industry," said Yasser Abu Mandil, technical manager at Mahmoud Saeed. - Reuters