(Bloomberg) Saudi Arabia, the world’s largest oil producer, has awarded two contracts valued at 15.7 billion riyals ($4.2 billion) for construction of a power station and a desalination plant in Ras Al Zour on the Persian Gulf.

A Korean-Saudi group led by Doosan Heavy Industries & Construction Co. won a contract valued at 6.6 billion riyals to build a 1.03 million-cubic meter desalination plant in the coastal city, the Saudi Press Agency said. A Saudi-Chinese group including Al-Arrab Contracting Co. and SepcoIII Electric Power Construction Corp. secured a separate contract valued at 9.1 billion riyals to build a 2,400-megawatt power station nearby, the official news service said.

The projects are part of a five-year, $400 billion fiscal stimulus package announced in late 2008 and designed to lessen the country’s reliance on oil exports. Saudi Arabia also approved a five-year, 1.44 trillion-riyal ($384 billion) development plan in August, SPA reported on Aug. 9.

Saudi Arabia, with the Arab world’s biggest economy, is developing water and electricity projects to keep pace with a swelling population and accelerating economic growth spurred by government spending. Power demand in the desert kingdom is likely to increase by 8 percent a year, Saudi Electricity Co. Chief Executive Officer Ali al-Barrak said on Oct. 4.

The desalination plant will supply 900,000 cubic meters of drinking water a day to the capital, Riyadh; 100,000 cubic meters to the northern town of Hafr Al-Batin; and 25,000 cubic meters to Saudi Arabian Mining Co., the state-controlled metals producer known as Ma’aden, SPA reported. Ma’aden has an aluminum smelter project in Ras Al Zour, 90 kilometers (56 miles) north of the industrial port of Jubail.

The power plant will provide electric power and thermal steam needed to desalinate the 1.03 million cubic meters of water, the news service said. About 1,350 megawatts will go to Ma’aden and 1,050 megawatts to Saudi Electricity Co., a state- controlled utility, SPA said.

To contact the reporters on this story: Mourad Haroutunian in Riyadh at mharoutunian@bloomberg.net; Glen Carey in Riyadh at gcarey8@bloomberg.net.

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net.

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