(Yicai) Feb. 24 -- China National Machinery Industry Corporation, also known as Sinomach, has agreed to invest USD996 million in a public-private project to build a pumped storage power station in Cambodia, complementing its existing hydroelectric projects.

China Heavy Machinery, a Sinomach subsidiary, and its partners will form an investment company to establish a project company that will build and operate the Upper Tatai Pumped Storage Power Station in southwest Cambodia, the state-owned enterprise announced recently.

The Sichuan province-based firm has signed build-operate-transfer agreements with Cambodia's Ministry of Mines and Energy and state-run energy supplier Electricité du Cambodge. The agreements ensure zero land rent and fixed usage fees during the expected 40-year commercial operation period. China Heavy Machinery will invest USD251 million of its own funds, with the remainder coming from bank loans. The internal rate of return is projected to be no less than 8 percent.

The hydroelectric power plant, which pumps water between two reservoirs at different elevations, is located three kilometers upstream from the dam of the Upper Tatai Hydropower Station currently under construction by the same company. The pumped storage project will feature four 250-megawatt turbines, achieving a total installed capacity of one gigawatt, with completion expected within five years.

This large-scale civil infrastructure project aims to achieve win-win cooperation between China and Cambodia, per the firm. It will enhance the peak-shaving capacity of the Southeast Asian nation's power grid, facilitate the effective absorption of new energy sources, particularly solar energy resources, and improve local power supply capacity during dry seasons and nighttime.

Over the past decade, China Heavy Machinery has constructed several large-scale power engineering projects in Cambodia, including the operational Tatay River Hydropower Station and the Upper Tatay Hydropower Station, which began construction in late 2022.

Shares of Sinomach Heavy Equipment Group [SHA: 601399], a listed unit of Sinomach, closed 1 percent higher at CNY2.95 (USD0.40) today.

Editor: Emmi Laine