RIYADH, (Reuters) – Power utility Saudi Electricity 5110.SE said it would borrow from banks and use Islamic bond to help finance a 6.88 billion riyals ($1.84 billion) contract signed on Tuesday.
The Gulf’s largest utility by market value signed the agreement awarding South Korean builder Doosan Heavy Industries & Construction and Arabian Bemco Contracting Co the contract to expand al-Qurrayah power plant.
The contract is for the conversion of al-Qurrayah into a combined-cycle regime from a gas-powered plant to add 1,241 megawatts of new capacity, Saudi Electricity said in a statement issued on Tuesday.
“The financing of this project … will use the firm’s own resources and through lending from local banks which includes issuing Islamic sukuk,” it said, without giving more details.
Doosan said last month that it had won a 1.27 trillion won ($1.22 billion) order to build a power plant in Saudi Arabia by 2013.
The new plant, which is expected to start production in 2013, will cater for Saudi power demand which is growing at an annual 8 percent, it added.
Saudi Electricity posted on Monday a 15.4 percent rise in third-quarter net profit, as seasonal peak demand increased revenue and new and more efficient plants helped it tame cost growth.