KUALA LUMPUR (Sept 21): Pekat Group Bhd (KL:PEKAT) said on Monday that it will lease about 470 acres of land in Sungai Petani, Kedah for renewable energy activities, including the development of solar photovoltaic systems and battery energy storage systems.

In a bourse filing, the engineering services firm said its wholly owned unit Pekat Teknologi Sdn Bhd had entered into a conditional lease agreement with an unnamed company to lease the land. The company cited a confidentiality obligation for its reason to not name the lessor.

Under the agreement, the lease will have an initial tenure of 24 years. Pekat Teknologi will undertake construction works over 24 months, followed by an operating period of 21 years.

Pekat Teknologi will also have an option to extend the lease by between one and five years.

The monthly lease rental is RM350 per acre, with a 3% increase on every second anniversary of the commencement date after completion of the construction period.

Based on the estimated acreage and rental escalation, the aggregate lease rental over the 24-year term is estimated at RM54.5 million.

Pekat said the land will be used solely for renewable energy activities, including the generation and sale of renewable energy, as well as the development, construction, installation, operation and maintenance of photovoltaic solar panels, solar photovoltaic systems, battery energy storage systems and related infrastructure.

The lease is subject to Pekat Teknologi obtaining the necessary approvals and permits for the project and securing an acceptable offtake agreement for electricity generated at the site.

The lease rental and other payments under the agreement will be paid in cash, Pekat said.

Shares of Pekat gained 12 sen, or 5.7%, to RM2.23 at Monday’s noon break, giving the group a market capitalisation of RM1.58 billion.