Premier Group, headquartered in Kuala Lumpur, signed the exclusive licence agreement, which covers Malaysia, Indonesia and parts of Southeast Asia and has agreed to produce a minimum of 5,000 workhorse engines to be configured for palm oil use only.

The agreement calls for a non-refundable fee of US$500,000 (RM1.765 million) as well as a durability pilot site for 5,000 hours using palm oil, which is funded also by Premier.

Upon completion of the durability testing, Premier is obligated to provide contract production in Southeast Asia for the engines or may opt to produce its own production facility.

After the first 500 engines are produced, AVEC will receive US$2,000 per engine royalty on a perpetual basis. AVEC has agreed to provide the first right of refusal to purchase the continuing royalty should it decide to sell its forward revenue stream.

As part of this agreement, Premier shall also receive a first right of refusal to license AVEC electric motors or coreless generators after the initial payments of US$3 million are complete.

Premier Group managing director Rahim Mahmud said: "The enormous torque band allowing operation without a transmission and its ability to run on palm oil only or many other fuels creates an ideal situation for our country and most of Southeast Asia."

"As the world's largest producer of palm oil, our country has enormous ability to use these engines for very low cost power using non fossil fuel.

"We believe this sets the standard for the future of clean power without hydrocarbons and we will be bringing officials of the Malaysian government to the AVEC Technology Demonstration in Virginia Beach, US on July 14," he said.

Ahmed Khalifa, AVEC chairman, said: "This licence and the revenue received under it represent what we believe will be the first of many revenue streams in 2009." — Business Wire