Saudi Arabia’s Water and Electricity Company (WEC) has started detailed talks with a Saudi-Malaysian group to set up a power and water plant in Shuaiba, southwest of the kingdom.

The WEC said it hoped to sign a power and water purchase agreement in October with the group, which includes power firms Tenega Nasional and Malakoff and state investment arm Khazanah Nasional.
"We will now enter into contractual negotiations with the first-ranked bidder," WEC said, referring to the consortium which submitted the lone bid to build, own and operate the plant.
The installation will be able to produce 900 MW of electricity and 880,000 cu m of desalinated water per day. A source at WEC said it hoped to have financing arrangements for the plant, which will cost up to SR9.0 billion (about $2.4 billion), concluded in the first quarter of next year.
The project is backed by Dutch bank ABN AMRO, Arab Bank, Export-Import Bank of Korea, Riyad Bank and Saudi Hollandi Bank.
The Malaysian consortium and a Saudi partner, Arabian Company for Water and Power Projects, formed a 50-50 joint venture to bid for a 60 per cent stake in a new company which will develop the plant. The Saudi government will take a 32 per cent stake and the partly state-owned Saudi Electricity Company will hold eight per cent.
The plant will be linked to the kingdom's western electricity grid and will provide water to the cities of Jeddah, Makkah and Taif.
Shuaiba is one of several water and power plants which will be built on Saudi Arabia's Red Sea and Gulf coasts to meet the water and electricity needs of a growing population and industrial projects.
WEC said it received 44 expressions of interest from international and domestic firms to build, own and operate the Shuqaiq plant, an 850 MW and 212,000 cu m per day project on the Red Sea near the Yemeni border.
The company said it will pre-qualify a list of developers and send a formal request for proposals following the signing of the Shuaiba agreement.