The demand for electricity in Saudi Arabia has grown rapidly, and a number of factors account for this growth. The aim of this paper is to estimate the level of this demand and test for its main determinants. Cross-sectional data (i.e. regional) spanning the period 1980-92 and several estimators are used to achieve reliable estimates of the short-run and long-run own-price and income elasticities.The findings seem to be quite reasonable. First, the fixed effects method seems to fit the data better. Secondly, both the sign and the size of virtually all the elasticity estimates lie within the plausible range and most of them are statistically significant at ten per cent. Overall, the empirical evidence suggests that the demand for electricity in Saudi Arabia is both price-and incomeinelastic. However, the influence of urbanisation on electricity consumption is clearly larger than that of real income. Thirdly, 14 Abstract -continued the estimated speed of adjustment implies very short adjustment lags in the demand for electricity in Saudi Arabia. And finally, among the policy issues that are of relevance is the current pricing policy, which has been making the whole electricity sector suffer a loss.

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