UPDATE 1-Saudi's SEC, Korea's KEPCO to sign power plant deal

* Contract to build Rabigh plant to be signed on July 11

* Consortium includes Saudi's ACWA Power international

* Plant to be built in two phases

(Adds details, background)

By Asma Alsharif

JEDDAH, July 6 (Reuters) - State-run Saudi Electricity Company (SEC) 5110.SE will sign a contract on Saturday with a consortium led by Korea Electric Power Corp (015760.KS) (KEPCO) to build a 1,200 megawatt power plant, company officials said.

The deal for the Rabigh fuel oil plant will be signed on July 11 with the consortium, which includes Saudi firm ACWA Power international, Amr Aswaha, head of projects for independent power producers (IPP) at the firm, said on Monday.

Saudi Electricity, the largest Gulf utility by market value, is trying to meet soaring demand for power as infrastructure projects get underway in the world's biggest oil exporter.

Jeddah, the Red Sea port and commercial hub of the kingdom, has faced power cuts in its industrial zone for up to five hours a day since last month as demand exceeds supply in the kingdom.

Demand peaks in the summer when air conditioners work at full throttle to counter soaring desert temperatures.

Chief Executive Ali al-Barrak said last Saturday that financing for the project was secured and the contract would be signed on July 11. SEC would have 20 percent of the $2.7 billion project, Barrak said, confirming earlier information.

The KEPCO-led consortium had already emerged as preferred bidder, beating a consortium of Belgium's Suez (LYOE.PA), UK's International Power (IPR.L) and private Saudi Oger.

The plant, north of Jeddah, will be built in two phases with 600 megawatt added by 2012 and another 600 megawatt by 2013, Aswaha said.

Barrak also told Jeddah companies affected by the cuts on Saturday that his firm would sell more Islamic bonds to finance boosting capacity after raising some 7 billion riyals ($1.9 billion). But he said funding for projects was difficult.

"The company is suffering from difficulties in funding and difficulties in finding the finances for the projects which it had signed," Barrak said.

Saudi Electricity is currently working on projects worth 75 billion riyals that will be completed within three years. (For Reuters content on Islamic finance, click on ISLAMIC)

(Reporting by Asma Alsharif; Editing by Ulf Laessing and Sue Thomas)