Local Islamic bank Al-Rajhi Bank is expected to underwrite the sharia-compliant tranche, which the executive expects to come to the banking market in late 2008 or early 2009.

Following the award of the contract for the project to the Tarabot consortium in May, banks advising the group will start their first meetings to discuss structuring the project finance.

Current cost estimates put the project to link the kingdom’s Red Sea and Gulf coasts at about $7bn, with about 70 per cent of that amount to be debt finance.

“There is a lot of pressure on Saudi Railways Organisations [SRO] to fast-track this project since a developer has been selected,” says the source.

SRO is the client on the project, which has been planned since 2004 and is only now starting to achieve significant progress.

BNP Paribas is the financial adviser on the project along with Saudi Fransi, Samba, Mashreq-bank, Arab Banking Corporation and Royal Bank of Scotland.

The Landbridge is one of the most significant construction projects ever undertaken in the kingdom.

By linking the deep-sea port at Jeddah to the Gulf, companies will be able to move goods from coast to coast in 24 hours, rather than taking five or six days by sea to go around the Arabian peninsula.