Japanese trading house Sumitomo Corp said on Wednesday its consortium has won preferential rights to join a 500-600 billion yen ($4.7-5.7 billion) power and water desalination project in Saudi Arabia.

A spokesman for Sumitomo, which leads the consortium, said Malaysian power provider Malakoff Bhd and Saudi Arabia's Al-Jomaih group are also in the consortium.

The Nikkei business daily reported that the Saudi government will take a 40 percent stake in the plant, to be located northeast of Riyadh, and the three companies will hold 20 percent each.

The spokesman said details had not been decided but the companies will likely hold equal stakes. The plant is expected to generate around 1 million kilowatts of electricity, equivalent to the amount produced by a typical nuclear reactor in Japan, and some 1 million tons of water a day.

The paper said the water output would be the largest in the world and was expected to boost the supply of fresh water by 30 percent in Saudi Arabia, where concerns about a shortage of electricity and water are mounting amid economic and population growth.

Sumitomo is expected to use equipment made by a unit of Fuji Electric Holdings for the plant, and operations will likely start in 2012, the paper said.

Sumitomo shares rose 0.9 percent to 1,448 yen by 0008 GMT, against a 0.2 percent fall in the benchmark Nikkei average Fuji Electric shares gained 1.3 percent to 380 yen. - Reuters