In an effort to rescue the deficit-ridden utility Electricite du Cambodge, the government has approved a power rate hike of as much as 100 percent, senior government and EdC officials confirmed Wednesday.
The price increase, set to take effect Sept 1, was approved by both prime ministers last week following the election, a Council of Ministers official said.
Several top officials, including the chief of EdC, declined to comment on the rate hike this week. Speaking on condition of anonymity, a Cabinet official described the rate hike as a “sensitive” issue that was delayed until after the polls for “political reasons.”
The official said the Industry and Finance ministries put forward the request for an increase several months ago and were told by the Council of Ministers that any hike would have to wait until after the July 26 election. Following the polls, the request was made again and this time approved “on principle” by both prime ministers, he said.
The cabinet chief of First Prime Minister Ung Huot, however, said the premier had not signed any agreement to a price rise. Industry Minister Pou Sothirak also appeared to be unaware of the decision. “I have not yet seen that,” the outgoing minister said. “I don’t know if it is true.”
EdC Deputy Director of Planning Ty Narin said rates would rise from the current price of 350 riel per kilowatt hour to as much as 700 riel.
The new rates are to take effect at the beginning of next month, he said. But another EdC official said Wednesday that the new rates were not that high and would vary depending on the customer’s category.
This would be the utility’s first rate hike since prices were set in 1994.
Despite the riel’s depreciation to the current rate of about 3,800 riel to the dollar, the power price has continued to be calculated on the rate of about 2,600, officials said. In the past, officials have cited the fluctuating exchange rate as one of the reasons EdC is failing to turn a profit.
According to Ty Narin, the EdC has lost about $1 million a year since 1995. Despite steps to privatize the state-owned utility, regain control from private operators and make EdC profitable, the utility continues to lose several hundred thousand dollars monthly and must be subsidized by the cash-strapped Finance Ministry, the Council of Ministers official said.
The rate hike appears set to affect smaller businessmen more than Cambodia’s large manufacturers. Roger Tan, secretary-general for the Garment Manufacturers Association of Cambodia, said Wednesday that few textile factories use EdC and prefer generators for a more reliable supply of power.
If there is any impact, he said, it will be on EdC as the few factories using city power would probably return to generating their own electricity.
Local residents interviewed Wednesday expressed displeasure at the news.
“I think if the EdC increases the rates higher than 500 riel [per kwh] it will affect peoples’ living conditions,” said 56-year-old Cham Bun at Tuol Tom Pong Market.
Ty Narin acknowledged the move will not be popular, but said it was necessary.
“I know people will not be happy with this,” Ty Narin said. “But how can someone do business without income?”