Piecemeal Power System Keeps Many in Dark

That sinking feeling that comes when fans slow to a stop and entire city blocks go silent should not be striking as frequently in Phnom Penh since two electricity generators came back online this week. But Phnom Penh, even when plagued by blackouts, is light-years ahead of most other parts of the country, and observers worry that the piecemeal approach of a new power plant here and a patch of transmission lines there is not leading to the real solution: a national power grid.

And the debate continues over whether Cambodia should import electricity from Thailand and Vietnam or try to produce its own. A majority of the electricity currently produced in Cambodia is generated with expensive, imported fossil fuels, and other options, such as hydropower plants, have problems of their own.

Further adding to the confusion is the need for private investment in a sector still too small to guarantee profits for large power plants, and a lack of transparency that hinders competition in this vital industry, analysts said in recent interviews.

Jupiter Power is one example of the trials of private power development.

Backed by Canada-based firm Caterpillar the world’s largest producer of construction and mining equipment Jupiter opened a power plant in Pursat province in 1996 and expanded to Kompong Chhnang and Battambang provinces in 1997 and 1999, respectively.

But all three projects are now shut down.

Some were on short-term contracts that simply expired, but Jupiter President and CEO Seila Sok said that was not always the case.

Seila Sok said that his company is closing because the government has favored quick fixes over long-term investment, and denied Jupiter contracts in favor of powerful individuals.

“It is related to transparency and corruption,” Seila Sok said of his firm’s withdrawal.

Jupiter had a 25-year contract with the Battambang provincial government. But four years into the contract, Jupiter was replaced in 2003 when state-run Electricite du Cambodge took over the province’s electricity, Seila Sok said.

Ith Praing, secretary of state for the Ministry of Industry, Mines and Energy, said the contract was invalid because the provincial governor signed it without the ministry’s permission.

But Seila Sok said EdC pushed Jupiter out to help secure donor funding for infrastructure to import power from Thailand support they could not secure if there was a long-term contract in place with a foreign firm.

Jupiter’s last remaining project, a short-term contract in Phnom Penh, will expire on June 30.

Cambodia Electric Power, a firm belonging to casino tycoon and newly-appointed CPP Senator Ly Yung Phat, will soon open a 45-megawatt plant serving Phnom Penh.

Jupiter’s bid for that project was rejected on the grounds that it did not prove it could build the plant in one year, Seila Sok said.

But Caterpillar which has large power projects in many developing nations recorded $30.25 billion in sales and revenue in 2004, according to its Web site.

“If they give us a chance, I do not think we will fail this bid,” Seila Sok said.

Ly Yung Phat could not be contacted, while Ith Praing confirmed that lack of available capital was the primary weakness of Jupiter’s bid, adding that the government had been in a rush to remedy the power shortages.

“We were looking to any company that had cash in hand,” Ith Praing said. “We did not want any company that borrows money from banks.”

Ith Praing said other foreign bids were similarly rejected because they required six months or more to prepare their financial documentation.

Seila Sok conceded that seriously rich individuals can operate faster than Jupiter, which needs oversight from Caterpillar to make sure everything is done right.

“[EdC and other government officials] give us a very short term,” he said. “We have no time to think.”

Tan Kim Vin, EdC director general, said electricity projects are contracted to private firms through fair and transparent bidding. “When we have bidding, we spread information internationally,” Tan Kim Vin said. “We do not do it secretly.”

But some projects operate outside the bidding process, Seila Sok said.

When Australian company Eclipse Energy was unable to secure financing for a 15-megawatt plant contract to serve Phnom Penh, the project was doubled to 30 megawatts and given to Khmer Electric Power, a firm belonging to business tycoon and recently-appointed CPP Senator Kok An. The plant will soon expand to 45 megawatts, all without bidding, Seila Sok said.

Kok An said he was granted the contract because he could provide cheaper power than his competitors.

“Prime Minister Hun Sen liked my price,” Kok An said, adding that EdC is hemorrhaging $5 million per year in losses and needs to go for the cheapest bidder.

Despite a recent 11-percent hike in electricity prices, EdC is losing money because of high production costs, Tan Kim Vin confirmed.

Various ambitious power projects, both public and private, have recently failed.

Kampot province’s skyrocketing prices of up to $0.35 per kilowatt hour compared to less than $0.07 just across the Vietnamese border inspired protesters to storm the provincial governor’s office in January.

Many Stung Treng province residents have been waiting eight months for a South Korean company to connect them to the grid. And a Chinese firm’s hydropower plant at Kirirom national park in Kompong Speu province, which was intended to serve Phnom Penh year-round, does not have enough water to work in the dry season, officials said.

With gas prices climbing and imported electricity and hydropower still mostly in the planning stages, a lot of electricity is now being generated with heavy fuel oil, which is much cheaper than diesel.

The two Phnom Penh generators totaling 10 megawatts that went back online Monday were down while technicians converted them to cheaper, heavy fuel oil, Minister of Industry Suy Sem wrote on Feb 2 in response to an inquiry by opposition lawmaker Keo Remy.

Tan Kim Vin said that blackouts in Phnom Penh should now be less frequent.

But the conversion to fuel oil may be shortsighted. While it is cheaper than diesel, it causes more pollution and still must be imported, said Anthony Jude, principal project specialist for the Asian Development Bank’s Manila-based Mekong infrastructure department.

The best solution for the next five to 10 years would be importing electricity from neighboring countries with a long-term plan of building hydropower plants, he said.

“[Importing electricity] should bring the cost of power down, at least to Phnom Penh,” Jude said.

Only 17 percent of the population has access to electricity, ADB programs officer Ouk Nida wrote in an e-mail. “The power sector in Cambodia is small in overall size and fragmented, with 24 isolated power systems centered on the various provincial cities and the capital,” he wrote.

Planned power plants include the 180-megawatt Kamchhay hydropower project in Kampot province and two Sihanoukville natural gas plants totaling 195 megawatts, Suy Sem wrote.

Grids and transmission lines connecting Vietnam to Phnom Penh and Thailand to Siem Reap, and projects connecting provinces and municipalities within the country, are in various stages of planning and construction, he added.

Jude said it is important to think big when it comes to Cambodia’s power.

While importing power may be necessary for a few years, offshore fossil fuel exploration could eventually turn the tables, he added.

“If the gas resources are there, then later we can look at large-scale generation, not just for internal consumption, but also for export,” he said.

(Additional reporting by Thet Sambath)

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