Saudi Energy affiliate Al Morjan Two Electricity Company has reached financial close on the Rabigh 2 expansion project after arranging $2.58 billion (SAR 9.69 billion) in debt financing, according to a filing with the Saudi Exchange. The deal stands among the largest power sector financings completed in the kingdom this year and marks a further milestone in Saudi Arabia’s programme of adding generation capacity through independent power producer schemes.
A 34-year facility for a 2.3 GW plant
The financing runs for approximately 34 years and will fund the development, construction, ownership and operation of a 2.3 gigawatt combined-cycle gas turbine plant in Makkah province. The design also allows for a carbon capture unit at the site, aligning the project with the kingdom’s intention to lower the carbon intensity of its electricity supply.
Saudi Energy has confirmed that its guarantees in connection with the financing are limited to its standby equity and reserve account, a structure that keeps the parent group’s direct exposure tightly contained. The company expects the operating financial impact of the project to be reflected in its results from the second quarter of 2029 onwards.
A broad lender group signals market confidence
The facility was provided by a group of local, regional and international banks, including Abu Dhabi Commercial Bank, Alinma Bank, Boubyan Bank, Commercial Bank of Dubai, HSBC Bank Middle East, Riyad Bank, Saudi Awwal Bank and Saudi National Bank. The syndicate extends further to China Minsheng Banking Corporation, Industrial and Commercial Bank of China, Industrial Bank, National Bank of Greece, Standard Chartered Bank and Sumitomo Mitsui Trust Bank.
The breadth of the lender group points to sustained institutional appetite for Saudi power infrastructure, where long-dated contracts and a single state-backed offtaker continue to attract capital from across the Gulf, Asia and Europe.
The power purchase agreement behind the project
Rabigh 2 moved decisively forward in April, when Saudi Energy signed a power purchase agreement with Saudi Power Procurement Company valued at $3.1 billion (SAR 11.5 billion). The agreement covers the development, financing, construction, ownership and operation of the natural gas-fired combined-cycle plant, together with the construction of an extension to a 380 kilovolt electrical substation.
The agreement runs for 31 years from the plant’s commercial operation date. Saudi Exchange records also show that Saudi Energy holds a 40% effective interest in the project.
Scale and momentum across the sector
Saudi Energy owns about 56 gigawatts of generation capacity, equivalent to roughly 60% of the kingdom’s national capacity, and serves more than 11.5 million customers. Its market capitalisation stood at approximately $17.3 billion (SAR 64.8 billion) in early October.
The Rabigh 2 financing follows $3.4 billion raised in 2025 for the Rumah 1 and Nairyah 1 power projects and $2.9 billion secured alongside Acwa for the Qurayyah independent power producer expansion. The sequence underlines the pace at which the kingdom is adding gas-fired capacity to meet rising demand from industrial growth and electrification.
For lenders, the 34-year tenor illustrates the confidence that international institutions place in Saudi Arabia’s power procurement model. For the kingdom, it moves another large generation project from planning into delivery, strengthening grid capacity as electricity demand climbs and reinforcing the resilience of the national energy system.
Source: www.forbesmiddleeast.com