Hong Lai Huat Group’s subsidiary HLH Agriculture (Cambodia) Co. has entered into a non-binding memorandum of understanding (MOU) with China Machinery Engineering Corporation (CMEC) for a solar farm project in Cambodia.

Pursuant to the MOU, Hong Lai Huat and Hong Kong-listed CMEC will form a special purpose vehicle (SPV) to develop and operate a 200 megawatt (MW) solar farm at Aoral Eco-City, Hong Lai Huat’s development project in Cambodia.

The proposed collaboration will be for a period of at least 20 years, with a right-of renewal included for a further 20 years.

In a media release dated April 26, Hong Lai Huat states that the estimated investment value of the project is approximately US$200 million ($265.8 million).

When completed, the proposed solar farm will supply electricity to the state-owned Electricite du Cambodge (EDC) grid under a Power Purchase Agreement (PPA) between the SPV and EDC. 

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Revenue generated under the PPA will be shared between the group and CMEC.

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The group will also have the first right to purchase electricity from the solar farm at the same rate at which it supplies EDC. Hong Lai Huat states this will enable the provision of a sustainable and stable electricity supply for investors that set-up base in Aoral Eco-City.

A binding agreement further defining details of the partnership is expected to be signed in the next 90 days.

Ong Jia Jin, general manager and executive director of Hong Lai Huat, says the proposed solar farm will be the largest of its kind in Cambodia.

“The proposed solar farm project is a key element of the eco-city and will provide clean power to the local population, reducing carbon emissions to the environment while enhancing energy security for investors in Aoral Eco-City,” he says.

Wang Haitao, chief representative for CMEC, says, “Hong Lai Huat will complement our engineering expertise to ensure the success of the proposed solar farm project. In line with the global transition to renewable energy, we are proud as one of the pioneers in providing clean energy in Cambodia.”

Shares in Hong Lai Huat closed 0.2 cents or 2.17% lower at 9 cents on April 23.