Building a power plant in Cambodia? It’s a long game involving massive investment, complex construction, and critical agreements like the PPA with EDC. Securing your finance is vital, and how and when you secure different assets matters immensely!

Picture this:#

“Khmer Solar One,” a project company (SPV), is set to build a major solar farm. Funding is sought from two lenders, “InfraLoan Capital” and “AsiaDev Finance.” Both want a comprehensive security package over:

  • Assets covered by the Law on Secured Transactions (LoST): This includes thousands of solar panels and inverters (yet to be shipped), construction contracts, bank accounts, and crucially, the rights under the Power Purchase Agreement (PPA) signed with Electricité du Cambodge (EDC).

  • The land itself (separate registration): Security over the land rights (like the long-term lease or ownership) falls under the Land Law and Civil Code, requiring registration at the Land Registry.

InfraLoan Capital meticulously prepares its full loan and security documentation covering everything. Meanwhile, Leakhena, the sharp lawyer for AsiaDev Finance, understands the timing advantage under the LoST.

Here’s the Smart Play:#

Even before AsiaDev Finance finalizes its loan agreement, before the first panel arrives, Leakhena gets Khmer Solar One’s authorization and files a Notice at the Ministry of Commerce’s Secured Transactions Filing Office (STFO).

This notice registers AsiaDev’s intended security interest over movable assets governed by the LoST, stating something like: ‘all present and future equipment, permits, bank accounts, and specifically, all rights, title, and interest in and to the Power Purchase Agreement with Electricité du Cambodge.’ It publicly stakes AsiaDev’s claim on the project’s key movable assets and core revenue stream. It’s like putting a big, public “RESERVED” sign on these future assets, visible to everyone. (Leakhena knows the separate mortgage over the land rights needs registration at the Land Registry later).

A month later, InfraLoan Capital proudly signs its comprehensive security package. They disburse initial funds (giving value). The first containers of solar panels arrive (Khmer Solar One gains rights in that collateral). InfraLoan feels secure. Subsequently, AsiaDev Finance finalizes its documentation and disburses funds.

If challenges arise, who likely has the stronger claim over the PPA and equipment? AsiaDev Finance! Why?

Because undert the first to file or perfect rule,filing the Notice FIRST at the STFO often dictates PRIORITY for the assets covered by the Law on Secured Transactions.

Think of it like this:#

  1. LoST Filing (at MoC STFO) = Claiming the Movables & PPA Rights: You register your intended security over equipment, accounts, and contract rights (like the PPA) early. This notice tells the world, “AsiaDev Finance has first claim on these specific assets governed by the LoST!”

  2. Attachment (LoST Assets) = Energizing the Connection: This is when the security interest becomes enforceable against Khmer Solar One for specific assets. It requires:

    • Khmer Solar One authenticates a Security Agreement describing the collateral (including PPA rights).

    • The lender (AsiaDev or InfraLoan) gives value (lends money/commits to lend).

    • Khmer Solar One has rights in the specific collateral (e.g., owns delivered panels, has effective PPA rights).

  3. Land Security = A Separate Foundation: Security over the land itself (mortgage/hypothec) follows Land Law rules and requires registration at the Land Registry. Its priority is determined by that registry.

The Cambodian Power Play:#

Even if InfraLoan’s documents were signed first, and their security “attached” to the first panels before AsiaDev’s, AsiaDev filed their notice at the MoC STFO first. This early filing generally gives AsiaDev priority regarding all assets covered by the LoST notice – including initial and future equipment, and critically, the rights to EDC payments under the PPA.

Understanding the STFO Filing: Notice vs. Security Agreement#

A key point often encountered is what gets filed at the STFO. While the comprehensive Security Agreement holds all deal specifics, the public filing required by the LoST is typically just a concise Notice.

  • The Notice’s Role: Public notification. Requires key identifiers (debtor, secured party) and a description of the LoST collateral.

  • The Security Agreement’s Role: Contains the detailed commercial terms negotiated between parties.

  • Filing Consideration: Filing the complete Agreement instead of the Notice isn’t usually necessary for LoST perfection and could inadvertently place sensitive commercial details (rates, covenants) into the public domain. Using the prescribed Notice format ensures compliance while helping maintain confidentiality.

The Takeaway for Cambodia Power Projects:#

Lenders & investors must act strategically on both fronts:

✅ For movable assets (equipment, accounts, etc.) and PPA rights, get your Notice filed early at the MoC STFO under the Law on Secured Transactions.

✅ For land rights, ensure your Mortgage is properly created and registered promptly at the Land Registry under the Land Law.

Understanding which law applies to which asset, using the correct filing procedures (Notice for STFO, Mortgage for Land Registry), and acting early are critical to protecting your entire investment package in Cambodian power projects.

Disclaimer: This is a simplified illustration for educational purposes and not specific legal advice. Cambodian secured transactions law, land law, and project finance require consultation with qualified legal professionals.