The Board of Directors of PESTECH (Board) wishes to announce that its 60% owned subsidiary company, Diamond Power Limited (DPL), had on 8 April 2015 completed the execution of all agreements in relation to the rights of the development of 230kV Kampong Cham Kratie Transmission System Project on a BOT basis (hereinafter referred to as the Project).
Background
Electricite Du Cambodge (EDC) had entered into a PTA for the development of the Project to bring the electricity from the upcoming Hydro Power Lower Se San 2 hydropower plant in Stung Treng to Kratie and Kampong Cham.
The Project has now been novated to DPL pursuant to the terms of the IA and the PTA through the IA Novation Agreement dated 20th March 2015 executed by, amongst others, the Ministry of Mines and Energy (MME) of the Royal Kingdom of Cambodia, EDC and DPL, together with the PTA Novation Agreement dated 24th March 2015 executed by, amongst others, EDC and DPL.
Following the IA and PTA Novation Agreements, MME and DPL have executed the IA Amendment No. 1 agreement, on 6 April 2015, and EDC and DPL have entered into the PTA Amendment No. 1 agreement, on 8 April 2015, to complete the transfer of the Project in its entirety to DPL.
As such, with the complete execution of all the abovementioned agreements as at 8 April 2015, DPL has now procured all the necessary legal documentations, which signify the full and effective ownership of the Project.
This marks the entry of the PESTECH group as an independent power transmitter on a concession basis.
The Project has commenced on 8 April 2015 (Commencement Date) and is to be completed by 30 November 2017 (Scheduled Commercial Operation Date).
The duration and validity of the PTA and IA shall continue for a period of twenty five (25) years (Term) from the Scheduled Commercial Operation Date.
The power transmission charges to be paid by EDC to DPL commencing from the Scheduled Commercial Operation Date of the Project until the end of the Term shall be as follows:
(i) for the first three operating years from the Scheduled Commercial Operation Date: USD12,250,000 per annum; and
(ii) from the fourth operating year from the Scheduled Commercial Operation Date until the end of the Term: USD18,215,910 per annum.
The cost for the development of the Project is USD92.21 million.
The Project will have no material effect on the revenue and earnings of PESTECH for the financial period ending 30 June 2015 but is expected to contribute positively to the future earnings and net asset per share of the Company.
PESTECH does not foresee any exceptional risk other than the normal operational risk associated with the Project. The Company will take necessary steps to mitigate the risks as and when it occurs.
None of the Directors and/or Major Shareholders and/or persons connected to them, has any interest, direct or indirect in the Project.
The Board is of the opinion that the Project is in the best interest of the Company.
This announcement is dated 8 April 2015.