YLI Holdings Bhd said its 37%-owned Pinang Water Ltd (PWL) has signed a pact with the Chinese government to construct a 100,000 cu m per day water treatment plant for Yi Chun City on a build, operate and transfer basis.
At the same time, PWL has signed an agreement to sell the treated water to the People's Government of Yi Chun City, Jiangxi Province through its appointed water supply company.
The two contracts, YLI said, were for a fixed period of 29 years, starting a year from yesterday.
PWL is jointly owned by YLI, PBA Holdings Bhd and KWI Far East Sdn Bhd on a 37:26:37 basis respectively.
The company was set up to prospect for waterworks related projects outside Malaysia.
YLI said Yi Chun City was a developing area, located within the Jiangxi Province, west of Shanghai. The city has a population of more than a quarter million people.
YLI said that presently, the water supply for the population of the city was being channelled from the old plant which supplied about 40,000-50,000 cu m per day.
However, it said, with the increase in demand and as the old plant would be demolished to make way for a flood mitigation dyke along the Yuan River, there was an imminent need for the city to construct and build a new treatment plant with bigger capacity to meet the increased demand.
The Chinese Government, through Yi Chun Water Supply Company, would purchase the treated/potable water from PWL with an undertaking to buy the minimum aggregate volume a day in accordance with a schedule, failing which the Chinese government would compensate PWL on the deficit, YLI said.
It added that the estimated initial project cost for the water project was RM17mil, of which YLI's 37% share would be RM6.3mil.
The project, YLI said, would be initially funded through capital injection by PWL shareholders and credit terms from the machinery suppliers. AFX