Saudi-based Emaar Economic City said on Monday it had agreed to set up a firm with Saudi Binladin Group (SBG) to finance, develop and operate a major port on the Red Sea coast.Emaar Economic City, spearheading the development of King Abdullah Economic City (KAEC) on the Saudi Red Sea coast, said its board approved on Sunday a preliminary accord with SBG over the joint venture, which this month will start works to build the port, it said in a statement posted on the bourse's website.
The first phase of the port will cost 4 billion riyals ($1.07 billion) with operations expected to start in 2012 and have a capacity of 1.7 million containers, it added.
The statement did not say if the agreement with SBG meant the cancellation of another initial agreement signed in April, 2008 by EEC with DP World for the same purpose.
The agreement with DP World also aimed at developing and operating the port at King Abdullah Economic City, except that it predicted operations to start towards the end of 2010 and to have a 1.6 million TEUs (twenty-foot equivalent units) capacity by mid-2011. DP World officials were not immediately available for comment.
Earlier on Monday, EEC announced that it had has cancelled a 1.4 billion riyals contract which it awarded to SBG in 2008 due to a drop in costs.
Dubai-based Emaar Properties is a key shareholder in EEC.
King Abdullah Economic City is the most prominent among a series of "economic cities" that are part of Saudi Arabia's plan to diversify the country's oil and gas-based economy and provide more jobs for the country's growing population.
EEC has faced some delays delivering housing and business units, as well as a 6-12 month delay on the first phase of the city's port which it expects to complete in 2011, reports Reuters.