Phnom Penh Governor Pa Socheatvong on Wednesday strongly denied that City Hall acted without transparency in procuring a public bus service operator and said there was no bidding process for the contract because only one company was prepared to shoulder the entire cost of the project.
Responding to a media report on Wednesday that quoted City Hall spokesman Long Dimanche saying there had been no bidding process on the bus contract, Mr. Socheatvong explained that the municipal government could simply not afford to provide any capital to the project and only Global (Cambodia) Trade Development was prepared to put up the full investment.
“This bus project has taken a long time to realize, and there were many partners that initially wanted to cooperate with us,” he said.
From the five companies that submitted proposals, the list was narrowed to two companies, Mr. Socheatvong said, referring to South Korean-owned City Trans Cambodia and Global (Cambodia) Trade Development, which both operate metered taxis in Phnom Penh.
“In other countries, companies operate with a so-called joint-capital investment from the state because the state operates the service. But our state doesn’t have the money to subsidize this, so we need the private company do it. [The other companies] asked that we help them with either money or oil, but we don’t have the capacity to help.
“Finally, only Global was brave compared to the other companies, because it did not require our help—they are willing to make a loss for two to five years,” he said, adding that without a company willing to lose money on a financially risky public bus service, the project would never happen.
Lim Andre, the CEO of Global Trade Development, confirmed Wednesday that the deal, which was struck on a verbal basis and will see his company invest $12 million over five years, would not make money for at least the first three years of operations.
Global Trade Development had initially backed out of the project after it was asked to share the contract with the other company, South Korean-owned City Trans Cambodia, but it eventually secured the deal after City Trans Cambodia was denied a license. But on Thursday, the managing director of South Korean company Global Trans Cambodia, Choi Dae Yong, denied that his company’s proposal required City Hall to subsidize its investment in the project.
“We did not ask City Hall for any investment subsidy to support us,” he said.