The two companies will form a joint venture, to be named IBAEC Engine Ltd., which will import the base NG engines from ACE's Chinese production customers, for assembling in Bangladesh, said a press release yesterday.

AEC recently signed an agreement with China's third largest automotive manufacturer Dongfeng Nanchong Automobile Co Ltd. to develop a natural gas engine compatible with Euro-3 emission standards.

The joint venture company will import base natural gas engines from ACE's original equipment manufacture customers in China and incorporate ACE's NG vehicle system at the company's facilities in Bangladesh.

The NG engines will be produced for both the Bangladesh and export markets.

IBH is part of the Inter Baraka Holdings group. IBH produces only CNG powered vehicles. Their product range includes TARO city buses and mid city buses, RAINO highway buses and KENDO trucks.

According to the MOU, IBH will provide land, buildings and other infrastructure while ACE will provide technical knowledge, support and services. IBH will fund all local operating costs.

The final shareholding of the joint venture company will be determined when project cost evaluations are completed and a formal joint venture agreement expected to be signed in November 2006.

Initial production capacity of the joint venture is planned for 200 to 300 NG engines per month.

The press release mentioned that Bangladesh has significant NG reserves and is building significant NG refuelling capacity for NG vehicles. The import of NG base engines and the ACE NGVS as raw materials will save the joint venture company up to 30 percent in local taxes.

IBH selected ACE due to its world leading NGVS and OEM contracts in China. ACE will benefit from its shareholding in the joint venture company together with the ongoing supply of NGVS and other specialised engine components to the rapidly expanding NG market in Bangladesh.