The subsidiary, HEI Power Corp., will invest $11.5 million for a 50 percent ownership of the $74 million plant and take the lead in building, operating and maintaining it, the company said. The plant will be powered by naphtha, a byproduct of the petroleum distillation process.
H. Ray Starling, president of HEI Power, said his company and Beacon Hill Associates Inc. will own the power plant for the first 25 years, selling the electricity to Electricte du Cambodge, the country's state-owned utility.
At the end of that period, ownership will transfer to the utility.
Construction is expected to begin in March 1997 and the plant is tentatively scheduled to be completed in July 1998, Starling said.
The developers expect to get risk insurance and a guarantee from the U.S. Overseas Private Investment Corp., he said.
"Since the 1993 United Nations-sponsored elections installed a constitutional monarchy and a free-market economy, Cambodia has been developing rapidly and power demand has been increasing dramatically," Starling said.
HEI's part of the funding will come from equity raised in the company's dividend reinvestment plan and not from other HEI subsidiaries, he said.
HEI Power was formed a year ago to explore opportunities to build power plants overseas.
Its first contract, announced in December, was for a $28 million hydroelectric plant in the Philippines. HEI is putting $6 million into that project and will have a 67 percent ownership stake.