China Hydroelectric Corporation (CHC) has agreed to transfer a 51% equity interest in Wuyue Pumped Storage Power Generation Co. to China Guangdong Nuclear Energy Development Co. (CGNEDC), with CGNEDC agreeing to fund a share of the development costs of a 1000MW pumped storage hydroelectric power project in Xinyang, Henan Province, China.
CHC currently holds a 79% equity interest in Wuyue Company, which owns the right to develop the 1000 MW pumped storage project. Under the framework agreement – which is subject to the completion of definitive documents, completion of due diligence and receipt of required governmental and other approvals in the PRC – China Hydroelectric will transfer the 51% equity interest to Guangdong Nuclear, who in turn will fund its proportionate share of the on-going development costs of the project. Definitive agreements on the project are expected to be completed by the first quarter of 2011.
The Wuyue Project will be used to supply clean and renewable peaking power capacity to Guangshan County. CHC purchased an equity interest in the Wuyue Pumped Storage hydroelectric project and established the Wuyue Pumped Storage Power Generation Co. Ltd. in June 2009 for RMB 162.5M with the intention of pursuing project development with a strategic partner. Since the acquisition, CHC has spent approximately $5M for the development phase. It is anticipated the construction timeline would span approximately six years once ground breaking occurs.
“We are pleased to enter into this initial framework agreement with CGNEDC which is the largest nuclear company in China,” said John Kuhns, Chairman and CEO of CHC. “CGNEDC currently owns and operates 2 W of large hydro projects, which includes participation in several storage facilities. Due to their development and construction expertise, specifically in large hydro electrical facilities, and their strong working capital position, we believe that this proposed joint venture with CGNEDC will help to accelerate the timeline for completion of the project. We are excited to be making a significant step forward with such a large and established player in the Chinese power industry.”