Cambodia has inked a deal with the Thai corporation Samart that puts the company in charge of the country’s air traffic control system for the next 15 years.
In exchange for investing $10 million to develop air traffic services here, the contract signed last month between the Council of Ministers and Samart Corporation Public Co hands a majority of air traffic revenue to Samart.
Though officials acknowledge a potential loss of revenue—air traffic services put $6.5 million into national coffers last year—Cambodia will get a modern radar system virtually for free.
“We have lots of benefits out of this deal,” said Soy Sokha, economic adviser to the Council of Ministers.
He said the agreement brings state-of-the-art air traffic equipment to the country, allowing Cambodia to stop buying overflight information from neighboring countries.
“We have had no sky control over our territory for more than 30 years,” Soy Sokha said. Cambodia has bought overflight information from Bangkok and Ho Chi Minh City, and Cambodia sometimes failed to detect illegal overflights by neighboring countries, he said.
“From now on, we will have our own control over Cambodian sky,” Soy Sokha said.
According to the contract, Samart will establish a new company, Newco, to develop and operate the system. Newco will buy equipment for the new system, including radar and other communication systems, from Airsys ATM, a subsidiary of the French electronics giant Thompson. Equipment will be installed at Pochentong, Siem Reap and Stung Treng airports.
Under the deal, Samart will pay Thompson $10.4 million for the equipment and subsequent training for staff. For the first 15 years, Samart will operate the system and collect fees from airlines.
Samart keeps 70 percent of revenues from overflight charges and 50 percent of revenues from airport navigation services, the contract states. The remainder goes to the government.
“Without a comparative assessment on it, I cannot say it is fair or not,” said Anthony Jude of the Asian Development Bank.
It is unclear exactly how much money Samart can generate from the operation. An unidentified Samart executive was quoted in the Bangkok newspaper The Nation last month as saying Samart will invest $15 million in the project and expects to reap annual profits of $6 million.
An e-mail inquiry to Charoenrath Vilailuck, Samart’s CEO in Bangkok, was not answered.
An insider close to the deal said the system itself will be built up within a year. He said a committee is developing a construction timeline for the project, which was welcomed by commercial airlines.
“Cambodia needs better equipment, better services to navigate airplanes,” said Thach Ouk, a Royal Air Cambodge executive. “This is for the safety of airlines.”
An air traffic control system has been on the government agenda for a year, but attempts to negotiate a deal with Thompson came under fire from donors, who said a contract was signed without the project going to bid.
“We advised the government last year to select a company through an open bidding,” Jude said.
And even though, six months later, the government has selected Samart, Thompson still is an integral part of the deal and the transparency of the deal has been questioned. But Soy Sokha said the project is a private investment that doesn’t have to go to bid.
Development projects in the civil aviation sector ran into trouble last year. The ADB suspended part of its $15 million loan for a renovation project at Siem Reap airport last May, saying the government handed airport operations and management over to a private French airport developer, Societe Concessionnaire l’Aeroport, without the bank’s consent.