A consortium of Saudi Arabia's ACWA Power and South Korea's Taekwang Power Holdings has signed a $2.2 billion thermal power plant investment agreement with Vietnam, ACWA Power said on Tuesday.

The pact comes as Vietnam faces a shortage in power supply amid the developing country's ever-increasing demand for electricity to fuel economic expansion, which hit a five-year high of 6.7 percent in 2015.

The 1,200-megawatt Nam Dinh 1 thermal power plant will be built on a build-operate-transfer basis for 25 years in the northern province of Nam Dinh, ACWA Power said in a statement on its website.

"This agreement is an important stepping stone for our first project in Vietnam," said Rajit Nanda, Chief Investment Officer of ACWA Power.

It is unclear how much each firm will invest.

The project is scheduled to start in mid-2016 after eight years of negotiations and will use coal provided by state coal mining group Vinacomin, Vietnam's trade ministry said in a Tuesday statement on its website.

Vietnam is expected to start importing coal next year as rising demand for power exceeds domestic supply, and since 2010 it has been a net consumer of oil, with demand growing 7.5 percent annually in the 20 years ended 2013, outpacing China at 6.5 percent, ANZ said in a report last year.

Last year, Vietnam's coal imports jumped 125 percent to 6.96 million tonnes, while exports dropped 76 percent to 1.7 million tonnes, extending the annual export downtrend of about 10 percent a year that began in 2010, customs data showed.