Electricite Du Cambodge signed an agreement Thursday with China National Heavy Machinery Co (CHMC) to build a US$80 million electricity transmission loop line around Phnom Penh.

The project, which is due to commence next year and be completed in 2012, is to be financed with a soft loan from the Chinese government.

The Phnom Penh Loop Line Transmission System would connect to transmission lines bringing electricity from all over Cambodia, including hydroelectric dams in Kamchay, Stung Tatay, Russey Chrum Krom, Cheay Araeng and Sesan Krom II. It would also connect to lines bringing electricity from coal and gas power plants in Vietnam.

CHMC has already completed a 36-month feasibility study on the project.

EdC Director General Keo Rottanak said the transmission project would improve the electricity supply in Phnom Penh.

"We hope that the project will bring stability to the country's electricity supply," he said.