The capital’s listed port operator has agreed to lease a portion of its container yard in Phnom Penh to a Chinese developer under a 40-year deal that it anticipates will generate rental revenue and increase port throughput.

Hei Bavy, director-general of Phnom Penh Autonomous Port (PPAP), said yesterday that the company signed an agreement on Friday to lease 9.6 hectares of its old container yard to Yunnan Sengmao Investment (YSI) for 40 years. He said the Chinese firm would use the land to build a construction material supply centre with 700 showrooms for retailers to display their products.

According to Bavy, the agreement falls under the build, operate, transfer (BOT) model, with YSI obliged to construct and then operate the supply centre for 25 years before turning it over to PPAP. YSI would have the option to continue operating the centre beyond the 25th year, in which case the rental fee would increase by 50 percent for the remaining 15 years.

Bavy said the decision to lease out an unutilised portion of PPAP’s old container yard aims at generating rental income from the company’s land bank, but was also expected to increase the volume of container traffic as retailers import goods to sell at the new supply centre.

“We expect that by having this agreement, we will generate revenue from land in our old port, while we hope it will bring 20,000 TEU of container traffic to the old port annually,” he said.

PPAP relocated its main container terminal to a purpose-built 10-hectare site in Kandal province in 2013. Its old container terminal in Phnom Penh is now rarely used.