Cambodia is currently seeking $3 billion in investment to build seven power plants over the next decade in order to meet rising energy demands, according to a senior official at the Ministry of Industry, Mines and Energy.
Industry Secretary of State Ith Praing said the government is looking to construct six hydropower plants by 2016 and one coal-powered plant by 2011, with a total capacity of approximately 900 megawatts.
“Maybe we need more than that,” he said last week of the funds needed to construct the plants, emphasizing that the $3-billion figure is not set in stone.
The government is in talks with investors, including Chinese and Korean companies, he said.
Demand for power has surged in recent years, along with the nation’s development, driving a need for more energy, Ith Praing said. In Phnom Penh, the power grid system can support 200 megawatts but the demand is nearly 300 megawatts, he said.
The lack of power-generating facilities has already resulted in high power costs that could stifle investment, Ith Praing said. “It’s almost $0.20 per kilowatt[-hour] in Phnom Penh,” he said. “Rural areas are sometimes $0.50 to $0.80.”
Economist Sok Sinha said the high price of electricity was simply one part of a larger equation in the economy. “If the power cost is high, some firms might move to Thailand or Vietnam. But you have to look at other costs, like labor cost,” he said, adding that Cambodia’s low labor cost would continue to draw businesses despite concerns about energy costs.
Still, Sok Sinha said, the rise in energy-intensive businesses is driving a need for increased power supply. “Power supply in Cambodia is not enough,” he said. “There are shortages in many rural areas, and also in Phnom Penh.”
Ken Loo, secretary-general of the Garment Manufacturers Association of Cambodia, said that while most garment factories have their own diesel-powered electricity generators, keeping them running has become more expensive as the price of diesel rises. Only last month, diesel prices jumped 10 percent at Phnom Penh filling stations.
“There’s a need for more power because there’s a need to bring the electricity price down,” Ken Loo said.