"The Royal Commission of Jubail and Yanbu signed its first contract for the Ras Al-Zour area ... costing SR59.9 million," the Saudi Press Agency said on Saturday.

The giant power and water project, estimated to cost $6 billion, is expected to be the world's largest when completed by the end of 2013.

The Ras Al-Zour power plant will have the capacity to generate 2,400 megawatts of electricity and produce 1,025 million cubic meters of desalinated water a day.

The contract was signed by Prince Saud bin Abdullah bin Thunayan, chairman of the Royal Commission for Jubail and Yanbu.

Speaking to reporters after the signing ceremony, Prince Saud said the commission signs contracts with national and international companies after conducting detailed studies.

Ras Al-Zour is located 60 km north of the industrial city of Jubail. Saudi Arabian Mineral Company (Maaden) is currently establishing a phosphate plant in this coastal city with the participation of Saudi Basic Industries Corporation (SABIC).

Maaden has awarded the first four contracts for its SR40.5 billion ($10.8 billion) integrated aluminum complex at Ras Al-Zour, a joint venture with Alcoa. The project is part of the Kingdom's move to diversify its industrial base to reduce its reliance on oil.