Power Rates Won’t Go Down if Loan Interest is High

The planned Kamchay hydro-electric dam in Kampot province may not lower electricity cost significantly in Cambodia unless the Chinese company the government contracted to build the plant can secure a low interest loan in China, officials said.

The Cambodian government has also become involved in loan negotiations between the Chinese contractor Sino Hydro and China Eximbank, the officials added.

Sino Hydro beat China Guodian corp for the project in May after three other companies, including one from Canada and one from Japan, dropped out of the bidding.

Ty Norin, head of the Electricity Authority of Cambodia, said that China Eximbank has offered Sino Hydro a 270 million U.S. dollar loan at 6 percent interest to build the Kampot province dam. The company had sought a 2 percent interest loan.

Minister of Industry, Mines and Energy Suy Dem said he has sent a formal request to Eximbank to negotiate on lowering the interest rate for the company. “If the interest rate is high, the company will sell electricity at a high price too,” Suy Sem said.

Ty Norin said he could not reveal the price at which the government is seeking to purchase electricity. The Kamchay dam is expected to generate 180 megawatts of electricity, which it will sell to Electricte du Cambodiage in Phnom Penh.

China Eximbank, wholly owned by the central Chinese government, is the sole lending bank for Chinese government concessional loans, according to the bank’s web site.

Bun Narith, the deputy director of the hydro electric department at the ministry, said in May that the Kamchay dam will cost  170 million dollars to construct while 100 million dollars will be spent on preliminary studies. Kampot Governor Puth Chandarith said he has not yet seen any activity at the Kamchay site.
(The Cambodia Daily, Oct, 28, 2005).