With as much as $1 billion slated for investment by Chinese companies in the Cambodian hydropower sector, a new report has raised serious questions about China’s investment policy here and attacked the lack of transparency in the power-planning process.
Chinese companies are currently backing six major hydropower projects at varying stages of development in Cambodia.
The report by International Rivers and the Rivers Coalition of Cambodia describes a trend where companies, backed by Chinese state-owned financial institutions, are rushing to exploit Cambodia’s hydropower resources while paying scant regard to international best development practices.
It accuses Chinese companies of exploiting the Cambodian government’s inability to monitor compliance with its own laws, and calls on the firms to demonstrate their commitment to following Cambodian law by making their activities transparent and accountable.
Cambodian government officials rejected the report’s assertions Wednesday, saying that hydropower dams were needed to help drive development.
Five of the six projects mentioned in the report have generated significant environmental concerns, including the Kamchay Dam in Kampot province—Cambodia’s first large domestic hydropower development—which is now under construction by China’s largest hydropower developer, the Sinohydro Corporation, and was financed primarily by a Chinese government aid package.
The 180-megawatt dam is located wholly within Bokor National Park and will flood 2,000 hectares of protected forest.
A second major hydropower project, the 110-megawatt Stung Atay on the Atay river in Pursat province was approved in 2007 and is being built by the Yunnan Corporation for International Techno-Economic Cooperation. According to an Environmental Impact Assessment report, the project will flood a substantial section of the Central Cardamom Protected Forest.
Elsewhere, a memorandum of understanding has been signed with the CYC and Yunnan Southeast Asia Economy and Technology Investment Industrial Co Ltd to develop a 235 megawatt dam on the Stung Russey Chrum river in Koh Kong province, despite a draft EIA pointing out potentially serious impacts on downstream communities.
A second MoU was signed with the China Southern Power Grid Company Limited for a feasibility study into a 260 Stung Cheay Areng dam in Koh Kong. The new report points out that the dam’s reservoir would displace about 1,500 people and extend into the central Cardamoms as well as flooding the habitat of 31 endangered fauna species including the world’s most important breeding site for the exceedingly rare Siamese crocodile.
The 80-megawatt Stung Tatay dam in Koh Kong that is being explored by China National Heavy Machinery Corporation has a reservoir that the report says is also likely to extend into protected areas in the Cardamoms.
Possibly the most controversial project of all would be the 465 megawatt Sambor dam on the Mekong mainstream in Kratie province planned by the China Southern Power Grid Company.
The “severe” environmental consequences of such a dam described by the report include blocking fish migrations and threatening the survival of the endangered Irrawaddy dolphin.
According to the report, there is evidence to suggest that the China Export-Import bank and the China Development Bank are financing the Kamchay and Stung Atay projects. Both are policy banks that largely implement macroeconomic policies and political directives of the Chinese central government.
“China’s strong support for Cambodia’s domestic hydropower development over the past couple of years is a complex interplay of entrepreneurial initiative on the part of Chinese State Owned Enterprises, backing by Chinese financiers and high-level political support,” the report claims.
An official from the Chinese Embassy, who asked not to be named, said it was incorrect to link Chinese companies investing in hydropower with Chinese policy as a whole.
“These are purely commercial projects,” he said.
Cambodia’s free flowing rivers and abundant natural resources are invaluable assets and are vital to the well-being of Cambodia’s rural population, wrote Carl Middleton, Mekong program coordinator with International Rivers and co-author of the report.
“While Cambodia’s traditional Western donors, together with the World Bank and Asian Development Bank have been hesitant to support the government’s hydropower development strategy due to concern over environmental and social impacts and questions over economic feasibility, the Chinese government has proven willing to provide expertise and financial backing,” Middleton wrote in an email.
In return, China expects little, apart from support for ‘One China’ policy and recognition of China’s interests, mostly trade related, Middleton added.
In a stout defense of Chinese investment in hydropower, Secretary of State at the Ministry of Industry Mines and Energy Ith Praing said that environmental concerns came second to Cambodia’s need for electricity and development.
“Are they suggesting that we stop hydropower altogether?” he asked.
According to Ith Praing, the Chinese investors had committed while others were dragging their feet.
“The [Chinese companies] dared to invest [in hydropower] first,” he said.
“We seriously discussed with the relevant ministries before these projects were allowed to proceed,” Ith Praing said. “Sometimes they may have an impact on the environment but we have to think of what is most useful to the nation.”
Secretary of State at the Ministry for Water Resources Sam Sarith said the report’s criticisms were unrealistic.
“If all anyone thought about was environmental damage and pollution they would just sit at home and do nothing,” he said.
There has been nothing illegal in the way these companies have gone about investing in hydropower in Cambodia, Sam Sarith added.
Deputy Executive Director with the NGO Forum on Cambodia, Ngy San said that he wanted was to see that all the options had been properly studied.
“We are asking the government to invite the public’s participation in the planning process to ensure Cambodia’s electricity system is affordable, sustainable and accessible to all,” he said.