The World Bank and other financial institutions are finalizing the details of a $82 million project to develop the country’s first national power transmission line between Phnom Penh and the Vietnam border, which is ultimately expected to bring electricity rates down.
Marian Piekutowski, a project consultant appointed by the World Bank, said Thursday the plan will allow Cambodia to buy and supply cheaper electricity from Vietnam.
The national grid will also become a foundation for the country’s electricity development, allowing Cambodia to stop relying on isolated small-scale power plants. Cambodia could then start building large-scale power plants using cheaper energy sources to supply electricity to the whole country in a systematic way, Piekutowski said.
Currently, only 7 percent of Cambodians have access to a reliable electricity supply.
“Our aim is to build an electricity highway in the southern part of Cambodia,” said Piekutowski, who has conducted a feasibility study with other consultants and the state-run utility Electricite du Cambodge. “We’re hoping the project may help encourage industries who use their own generators to connect to the national power supply system.”
According to the preliminary plan, a 220 kilowatt voltage (kV) transmission line will be installed from Phnom Penh to Takeo to the Chau Doc area Vietnam. A new sub-station will be built on the outskirts of Phnom Penh near the intersection of national routes 3 and 4 in order to control the country’s whole network.
This sub-station is expected to integrate all three transmission lines in the southern part of the country—the newly-installed 115 kV transmission line in the capital, the 220 kV national grid and another 115 kV transmission line being developed from the planned Kirirom hydroelectric power plant in Kompong Speu province to Phnom Penh—into one system, Piekutowski said.
The average electricity rate in Vietnam is $0.07 per kilowatt hour, about $0.04 cheaper than the cost of producing energy for the EdC, Piekutowski said. The electricity rates for consumers in Cambodia will still be cheaper than the current rates, even though the EdC will add the cost of transmission from the border to the rate, he said.
In addition to the national grid development, the project will also include expanding the energy supply to the country’s rural areas in the southern part of the country, he said.
Ty Norin, EdC’s executive planning director, said the EdC is also working on developing another national grid in the northwest area of the country with a Thai company in order to access cheaper energy from Thailand. Cambodia has signed an agreement with both Vietnam and Thailand for energy sector cooperation.
Piekutowski said the World Bank is considering financing $75 million of the $82-million project, including a $40 million loan from the Japan Bank for International Cooperation. He said the World Bank’s board of directors is expected to review the project financing in July. If approved, the project will start early next year and is expected to be completed in early 2004, he added.
Expensive and unreliable electricity were some of the concerns raised at Wednesday’s government-private sector public forum. Investors have long blamed energy expenses for the high costs of production, which they say has chased potential investors away.
For foreigners and industries, the electricity rate is $0.21 per kilowatt hour, which is considered to be high compared to neighboring countries.
Senaka Fernando, president of the 33-member International Business Club, said the new development plan is “a good sign” that energy costs will be reduced.
“Currently investors complain about the high cost of energy,” he said. “If the system is fully operational, prices should definitely go down.”
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