South Korea’s Posco Engineering & Construction is preparing to submit an offer for estimated $2bn-plus power plant in the eastern part of the kingdom.

According to sources close to the kingdom’s power sector, the South Korean contractor is preparing to submit an offer and proposal to state utility Saudi Electricity Company for a major power plant in Ghazlan in the eastern part of the country.

In June 2015, Saudi Arabia’s Public Investment Fund (PIF) signed a deal to acquire a 38 per cent stake in Posco. The estimated $1.1bn deal was completed in October. The deal involved Posco selling a 26 per cent stake to PIF, with Posco also issuing new shares for a 12 per cent holding to the Saudi state investment fund.

Saudi Arabia’s Public Investment Fund (PIF) has completed a $1.1bn deal to acquire a 38 per cent stake in South Korea’s Posco Engineering & Construction (Posco E&C).

The deal, which was signed in June, involves parent company Posco selling a 26 per cent stake to PIF. Posco E&C will issue new shares to sell a 12 per cent holding to PIF.

The proposed Posco project will form part of the kingdom’s efforts to meet the growing demand for electricity, which continues to grow at a rapid rate.

Saudi Arabia’s power sector is the biggest in the Middle East region with an installed generating capacity of just over 76,839MWMW in 2014 (the latest year for which figures have been published), although available capacity was much lower at 65,505MW. Available power in 2015 is estimated to have reached about 70,000MW.

The Electricity & Cogeneration Regulatory Authority (Ecra) forecasts that annual peak demand growth up to 2030 will average 7 per cent as a result of population growth and industrial expansion.