State-controlled Saudi Electricity Company (SEC) has agreed a murabaha Islamic financing loan worth SR5bn ($1.3bn) with four local banks to fund projects inside the kingdom.

The 15-year loan was agreed with National Commercial Bank (NCB), Saudi Arabia’s largest lender by assets, as well as Saudi British Bank (SABB), Samba Financial Group and Banque Saudi Fransi (BSF), according to a statement published on the Saudi stock exchange (Tadawul) on 13 December.

“The loan will be used to finance projects with the goal of raising power generation capacity, transport and distribution in all areas of the kingdom, in order to meet the rising demand for electricity due to economic and population growth,” read the statement.

The world’s biggest oil producer’s population now stands at more than 27 million, resulting in an annual 8 per cent rise in local demand for electricity.

SEC said it used about 274,000 barrels of oil a day for electricity production in 2009. Half of the kingdom’s electricity production uses natural gas as a feedstock.