Monday, March 23, 2009

Cambodia's electricity future

Written by Nathan Green (Phnom Penh Post [1])

Monday, 16 March 2009

powerlines 225x300 Electricity Supply Improvements in Sihanoukville by 2011 [1]State requests private investment for development of national grid as plans continue for increased electricity network coverage outside capital.

THE government is courting private investors for its proposed national electricity grid and is hoping to have the main backbone of the system in place by 2015, an official said last week.

Ty Norin, chairman of the Electricity Authority of Cambodia, told the 2009 Cambodia Outlook Conference in Phnom Penh on Thursday that private sector investment was needed to top-up donor and government funds already earmarked for the project to ensure maximum coverage. He did not name possible backers.

Under the government’s 2013-18 Cambodia Power Development System plan, the proposed national grid will be controlled by the state-run Electricite du Cambodge, but Special Purpose Transmission Licences will be available to private companies to operate sections of the grid, he said. It is expected that these will mostly be used to supply large individual consumers as well as rural areas off the main grid.

This is probably the biggest constraint that we hear about.

Stephen Higgins, CEO of ANZ Royal Bank, told the conference that affordable electricity prices and reliable access were critical for the future of the country’s manufacturing sector.

“This is probably the biggest constraint that we hear about but one that will be fixed in the next year or two,” he said.

Higgins noted that electricity cost from 18 US cents per kilowatt-hour in Cambodia compared to around 5.4 cents per kilowatt in Vietnam.

Ty Norin said the high cost of electricity was due to the country’s almost total reliance on fuel imports due to an absence of indigenous resources.

The government also hoped to firm up fuel supply agreements with key trading partners to enhance energy security and would build a coal-run power plant near Sihanoukville port to feed into the grid.

“We are very confident in the near future our power supply will not be entirely dependent on foreign fuel,” he said.

Ty Norin ruled out government subsidies or price controls to keep energy prices low, saying the national budget could not support subsidies and that price controls would make the market unattractive.

“We cannot force the tariff down by setting it lower because if the tariff is lower than the cost we will create an issue with sustainability of supply,” he said. “The market will die.”

However, major industries and Special Economic Zones within 10 kilometres of substations will be able to source electricity on a direct feed, which would give them a comparatively lower grid tariff by exempting them from network transmission charges. However, rural areas would likely face greater costs due to higher charges, said Ty Norin.

Phnom Penh, which accounts for 85 percent of Cambodia’s electricity consumption, will be the central point of the proposed grid. Substations will be built in the capital, Kampong Speu, Takeo, Kampot and Sihanoukville by 2011, he added. The grid will be connected to western Cambodia by 2012 to supply electricity to Siem Reap, Battambang and Banteay Meanchey.

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