Power utility Saudi Electricity said it would borrow from banks and use Islamic bonds to help finance a 6.88bn riyals ($1.84bn) contract to expand a power plant.

The Gulf’s largest utility by market value signed the agreement awarding South Korean builder Doosan Heavy Industries & Construction and Arabian Bemco Contracting the contract to expand al-Qurrayah power plant, reports Reuters.

The contract is for the conversion of al-Qurrayah into a combined-cycle from a gas-powered plant, to add 1,241MW of new capacity, Saudi Electricity said in a statement.

Doosan said last month that it had won a 1.27tn won ($1.22bn) order to build a power plant in Saudi Arabia by 2013, according to Reuters.

The new plant, which is expected to start production in 2013, will cater for Saudi power demand, which is growing by 8% annually, according to Doosan.