Saudi Railway Company (SAR) has awarded a 2.7 billion riyal ($720 million) contract to a consortium that includes China Civil Engineering Construction Corp to build a rail link, a senior executive said on Saturday.

The group includes Al-Ayuni Trading and Contracting Company and Al-Abdulaziz al-Omer Establishment for Trading and Contracting, said Abdulrahman al-Hoari, finance manager at Al-Ayuni.

The contract involves civil works for the 500 km (300 mile) rail section linking the capital Riyadh to Al-Qassim, part of the mega North-South rail project. The Chinese firm will build the metal tracks.

Saudi Arabia is spending billions of dollars to expand its rail network to meet the transportation needs of its growing population of 25 million and improve an antiquated logistics infrastructure.

The North-South railway will carry minerals from the Al-Jalamid and al-Zabirah mines in the north to the industrial city of Ras al-Zour and operate a passenger and freight train between Riyadh and al-Haditha on the Jordanian border.

'The Chinese firm has experience in that. That's why we selected the Chinese firm (to join the consortium),' Hoari said.

The Public Investment Fund (PIF) which is funding the project is expected to sign the contract later this year, he added.

The Chinese firm's share of the contract amounts to 20 per cent of its total value, while the two Saudi firms get 40 per cent each, Hoari said.

In April, France's Thales and Saudi Binladin Group signed a 350 million euro contract that includes the supply of signalling and telecommunication and other systems to the North-South link.-Reuters