A $300 million joint-venture project between Phnom Penh and a Singapore construction company to improve flood control could be debated in the National Assembly as soon as next month, a city official said Friday.
The city plans to establish Cambodia Corporation Construction Ltd, a 50-50 joint venture with SembCorp Engineering and Constructor Ltd. The project’s aim is to bolster the city’s flood control by improving dikes and drainage systems, said Than Sina, deputy governor of Phnom Penh. It will also repair roads, build a new garbage dump site further outside the city and help relocate squatters near the dikes, he said.
However, because the $300 million loan carries an interest rate 2.5 percent higher than concessional rates given by world aid agencies, the National Assembly must approve the project, Than Sina said. He has returned from Singapore to finalize the deal and translate it into Khmer for the National Assembly to debate.
That could come within the next two weeks, or in early June, Than Sina said.
The massive loan is being arranged by SembCorp through “major banks,” the Singapore Business Times reported.
The city has no choice but to take a loan with a 5.5 percent interest rate because it cannot wait for a 3 percent rate from somewhere else, Than Sina said, adding that the interest rate on the loan is lower than the current commercial rate of 8 percent.
“I don’t think the city could wait for that [kind of] loan,” he said. “Right now the city is damaged by rain and flooding.”
Under the agreement with SembCorp, the city would have a five-year grace period, under which it would not have to repay any money. The following five years would be dedicated to paying on the interest only. The city would pay off the rest of the loan in the next five years, Than Sina said.
The city will not use any money from the national budget, Than Sina said. Repayment of the loan would come from land holdings within the municipality, he said.
Once the $300 million loan is approved, the project could begin, Than Sina said. Once it has begun, he said, the city plans to finish the project within five years. That is 15 years faster than a plan devised by the Japan International Corporation Agency, which estimated the cost would be $261 million. “Twenty years is too long,” Than Sina said.
The city will still stick to the JICA study, he said, but with SembCorp will do it faster.
Under the plan, SembCorp would provide the engineers and the main contractor for the job. The city will provide hundreds of demobilized soldiers and engineering graduates, Than Sina said. Students will learn from the SembCorp engineers, and the soldiers will have work, he said. After the project, all of the equipment used will belong to the city, he said.
(Additional reporting by Brian Calvert)
