RIYADH, (Reuters) – A consortium led by Saudi Electricity will sign this month a loan agreement with local and foreign banks worth up to $1.47 billion to help finance a new power plant, its chief executive said.
“Up to 70 percent of the financing required for Riyadh 11 power plant will come in loans from banks. We expect to sign the agreement for this loan within two to three weeks,” Ali Saleh al-Barrak, chief executive of the state-controlled power utility, told Reuters.
“The partners in the plant will contribute 30 percent of the project’s cost in equity”.
The firm said earlier on Wednesday that it has agreed to form a joint-venture with GDF Suez, Japan’s Sojitz Corp and the local Jomaih Holding Group to operate the plant in the power-hungry Saudi Arabia.
Saudi Electricity will hold a 50 percent stake in the Darmaa Power Co joint-venture while GDF Suez, Sojitz and together hold the remaining half. The plant will have a 1,730 megawatts capacity.
“General Electric will supply the equipment for the plant and we have selected Hyundai Heavy Industries as main contractor for the construction of the plant,” Barrak added.
The Riyadh 11 plant will use natural gas as a feedstock. “Aramco will supply us with the natural gas,” Barrak said.
The partnership is among six planned IPP power plant projects in the kingdom aimed at adding 11,000 megawatts of capacity.
Power demand in the world’s largest oil exporter is rising at an annual 8 percent and is expected to triple to 121,000 megawatts from 40,000 MW currently, government officials say.