China Holdings, Inc. (OTCBB: CHHL), a diversified holdings company, announced yesterday, March 10, that the company has obtained a contract, via its subsidiary China Power, Inc., for the exclusive right to develop a biomass energy power generation plant with the local Ongnuite government in the Inner Mongolia Province of the People's Republic of China. This is the fourth such contract by the company, and the 50 MW of this contract brings the company's total potential power capacity to 270 MW in renewable energy, with 200 MW in biomass conversion and about 70 MW in hydroelectric.CEO Julianna Lu recently stated in an interview with Wall Street Reporter magazine, "In China, everyone is looking for alternative energy. It's a massive opportunity."
In exchange for China Power's commitment to invest up to $82 million, the local government has guaranteed financing for up to 65% of the investment, and provided land rights for up to 133,400 square meters of land for the plant, plus up to 333,500,000 square meters of land for straw resources. Additionally, the local government will pay the company almost $2 million once the plant is constructed, and the government has promised to purchase 100% of the power generated, at $0.08 to $0.09 per kilowatt.
It sounds like a sweet deal, but wait, there's more. The local government will guarantee the supply of the necessary roads, electricity, water, etc. for the project. And the company will pay no income taxes for the first three years and no more than 12.5% for the following three years.
Despite the news, China Holdings stock, CHHL, is holding steady, as yet unable to break 5 cents a share today, at the time this article was written.
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