Facing the partial suspension of an Asian Development Bank loan project at Siem Reap Airport, the government is defending its deal giving a French-led firm control of the popular central Cambodia airport’s management, saying the agreement can still generate revenues for the government and pay off its ADB loan.
The concession given by the government to Societe Concessionnaire de l’Aeroport guarantees the company more than 90 percent of airport revenues and 70 percent of the airport’s operating profits, while Cambodia still pays off the $15 million ADB loan.
“The Royal Government…is guaranteed enough revenues not only to cover the loan from the ADB, but also benefits from a substantial part of the revenues and operating profits,” reads a statement from the Council of Ministers.
But the statement does not outline how the concession can be a money-making venture for the government.
It instead defends the deal with SCA by saying last year’s decision by Prime Minister Hun Sen to also allow international flights into Siem Reap Airport—known as the open-skies policy—bound the government to involve SCA in the Siem Reap Airport.
Until the new policy was adopted, Pochentong Airport—where development and management services were given to SCA in 1995—was Cambodia’s only international gateway.
The 1995 agreement “had a clause for Siem Reap Airport to remain domestic until after the end of 2005,” the statement reads.
But the open-skies policy then made Siem Reap an international gateway also, and SCA, facing revenue losses, successfully negotiated for management control in April.
In its statement, the government also claims the Siem Reap concession satisfies the ADB’s policy encouraging private sector involvement in the airport’s development.
“The ADB did accept, in cooperation with [State Secretariat of Civil Aviation], to review the initial renovation program and calendar
…in order to use at best the remaining funds [from the ADB loan],” the statement reads.
The statement doesn’t, however, give any specific reasons why the government failed to consult with the ADB on the open-skies policy or the change of the airport’s operation and management.
A visiting ADB group late last month criticized the government for lacking a concrete development plan for the airport and pushed for a re-negotiation of the Siem Reap deal.
It also sharply criticized the government for not opening up airport management to a competitive bidding process.
Work on airport terminal renovations was suspended in the interim.
“We criticized that the government should have done an open bidding in a transparent manner and should have consulted about the changes,” said Anthony Jude, the bank’s acting country head. “But it’s already a ‘done deal’ and you can not change it.”
The ADB is still willing to help develop the country’s civil aviation sector, even though the bank was not happy with the way the government handled the matter.
Jude said new ADB consultants will come to Cambodia this month to review the government’s policies and methods on cooperation between the public and private sectors.
The bank will offer several options to develop Siem Reap Airport with the remaining more than $4 million in order to accommodate the increased number of tourists and international airlines in September, he said.
“We will look at what kinds of modifications might be required for an optimum solution,” Jude said.