Saudi Arabia plans to open bidding for the construction of a metro rail system in the commercial hub of Jeddah this year and begin operating it in 2020, an official from the state-backed firm managing the project said.

The plan for the multi-billion-dollar system suggests Saudi Arabia is pushing ahead with big infrastructure projects despite the plunge of oil prices since last year, which has slashed state revenue and pushed the central government's budget into deficit.

"Usually, railway projects take 36 months, so by the beginning of 2020 the construction phase should be over," Osama Abdouh, chief executive of Metro Jeddah Company, said.

The company quoted the cabinet as saying in 2013 that the approved cost of the project was SR45 billion ($12 billion) over seven years, but Abdouh said the cost was unclear because of adjustments to the plan.

A government official said previously that the metro would be 108 km long. Abdouh indicated, however, that the plan was now for a 149-km system; 20 km would be underground but the metro would mostly use elevated viaducts.

More than 200 international and Saudi companies attended a briefing on the metro plan in Jeddah on Monday. The country's second largest city, with 3.8 million people, has been struggling with inadequate infrastructure. The population is officially expected to reach 4.9 million people in 2020 and 6.3 million in 2033.

Abdouh did not say how the government would fund the project, but it has deposited SR446 billion  ($119 billion) at the central bank to pay for infrastructure and economic development projects.

In addition to the Jeddah project, Saudi Arabia is building a metro system in Riyadh, plans one in Makkah and has proposed one for Madinah. Despite the pressure on state finances, authorities view the projects as important to generate jobs, diversify the economy beyond oil and curb growth in domestic consumption of petrol.  - Reuters