Saudi developer Emaar Economic City has received a SR5 billion loan ($1.33 billion)  from the kingdom's finance ministry to speed up construction of a project, it said on Wednesday.

Two sources familiar with the deal told Reuters last year that the Saudi developer would receive the loan. Emaar Economic City, affiliated to Dubai developer Emaar Properties, is spearheading the development of King Abdullah Economic City, a project aimed at diversifying the kingdom's oil-based economy.

"The loan will serve to accelerate the development and construction of the second phase of King Abdullah City after the completion of phase one, which was completed at the end of last year," the developer said in a statement on Wednesday.

The loan has a 10 year tenor with repayment starting after an initial three year grace period, it said, adding the developer made guarantees against the loan by collateralizing a land area of 24 million and 724,000 sq m.

The project, aimed at building a new high-tech city on the Red Sea coast with business, industrial, leisure and residential estates as well as a giant port has been dogged by delays and lower-than-expected demand from local and foreign investors.

King Abdullah Economic City is among five so-called economic cities planned in the world's largest oil exporter to speed up job creation for the country's rapidly growing population.-Reuters