Saudi Arabia has awarded a SR6.79 billion ($1.8 billion) infrastructure contract to a consortium including a unit of China Railway Construction Corporation for a railway to the kingdom's holy sites.

The contract, which covers ground and civil engineering works, is the first of several to be awarded for the 450 kilometre high-speed rail linking the Red Sea port city of Jeddah to Mecca and Medina - Islam's two holiest sites.

China Railway Construction subsidiary China Railway 18th Bureau Group and two Saudi firms, including Al Arrab Contracting Company, are part of the winning consortium, contractors said at a signing ceremony in Saudi capital, Riyadh.

The project aims to ease the congestion on the road linking the two cities and reduce the duration of the road trip, the transport ministry said in a document describing the railway.

Millions of Muslims travel to Saudi Arabia, the largest Arab economy, each year to perform annual Islamic pilgrimage rituals.

Saudi Arabia expects the number of worshippers travelling to Mecca and Medina to more than double to 14 million per year by 2030 from 5.5 million in 2005, the transport ministry said.

Carrying at least three million people a year, the railway, which will be operated by the state-controlled Saudi Railways Org, is due for completion by the end of 2012, Saudi Minister of Finance Ibrahim al-Assaf told reporters.

'This project will benefit millions of Muslims from around the globe', he said.

Saudi Arabia has pledged to keep public spending high to sustain its economy through the global financial crisis that has sent much of the industrialised world into recession and forced it to project a budget deficit this year.

The world's top oil exporter amassed an enormous cushion of surplus revenues from crude exports during an economic boom spurred by a rally in oil prices. Crude prices have slumped to about a quarter of their peak of $147 a barrel, reached last July.

Saudi Arabia will finance the project through the state-owned Public Investment Fund, Mansour al-Maiman, secretary-general of the fund, told reporters.

China Railway's share of the infrastructure works deal is 21.25 percent, according to Ibrahim al-Rajhi, board member of al-Rajhi Investment Group, which is involved in leading the consortium's bids.

Al Arrab will get 63.75 percent of the contract's value and another local firm 15 percent, he told Reuters. He said Alstom, French maker of TGV trains, would bid for the locomotives tender, without saying when that would happen.

A tender for five train stations would take place in the third or fourth quarter of 2009, Rajhi added.

The railway will include a station at Jeddah's airport, the main arrival point for Muslim worshipers.

The transport ministry said the trains, which would travel at 320 kilometres per hour, would reduce by more than half to two hours the length of time it takes to travel by car from Jeddah to Medina, Islam's second holiest site.

It would also cut to 30 minutes the time it takes to transport worshippers from Jeddah to Mecca, home to the Grand Mosque, Islam's holiest site.-Reuters