This is the second phase of the project that aims to deliver 150,000 cubic metres of water per day to WEC under a 20-year water purchase agreement beginning in February 2009.

The other signatories to the agreement include Malaysian companies such as Tenaga Nasional Berhad, Khazanah Nasional Berhad and Malakoff Corporation and Public Investment Fund.

"The SR870 million expansion project will utilise the reverse osmosis desalination technology at a site adjacent to the main project at Shuaiba on the kingdom's western coast," Fahd Al Shareef, Governor  of the Saline Water Conversion Corporation (SWCC) told newsmen at a Press conference following the signing ceremony in Riyadh recently.

"A particular challenge faced by this project is the requirement to deliver an additional supply of water to augment a much-needed water supply to Jeddah, Makkah, Taif and Al Baha as early as possible," Al Shareef said.

"Yet another challenge being faced by the project team is to deliver this water at the same tariff as that of the main project even though this project is being contracted 18 months later in this highly inflationary environment where equipment and construction costs have risen dramatically," he added.

Doosan Heavy Industries and Construction will build the project under a lump-sum-fixed-price-turnkey contract. It will be operated by an operation and maintenance company owned by ACWA Power Projects, the three Malaysian partners and the First National Operation and Maintenance Company.

A combination of equity and debt is funding the project with debt financing and equity bridge facilities being provided by Bayern LB, Al Rajhi Bank and Gulf International Bank. Bayern LB is leading the group.

The proposed plant will be built on a reclaimed land close to the Shuaiba 111 Independent Water and Power Project complex.