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China IPO to benefit Kingdom

China's Sinohydro Group Ldt earned US$2.12 billion in an initial public offering on the Shanghai Stock Exchange, the company announced yesterday. The move came just two months before Sinohydro launches the Kamchay Hydroelectric Dam in Cambodia’s Kampot province.

The company expects the IPO to help fund future projects in the Kingdom, as well as several construction works in China and abroad, Sinohydro Cambodia representative Zhao Jinhui said yesterday. “We should be able to use money from this IPO to fund our projects here directly,” Zhao Jinhui said. “We won’t need to go to the bank for funding anymore.”

The company sold 3 billion shares at CNY4.50 (US$0.70) per share, 500 million shares less than announced last week in a Shanghai Stock Exchange prospectus.

The offering was among several in China that struggled this week with uncertainty in the global markets, Reuters reported.

Sinohydro is planning or currently building several other projects that will keep the company in Cambodia long after the December 7 launch of the $280 million dam. Work on a bridge, another dam and two large-scale irrigation systems are underway, with several other projects presently being discussed, Zhao Jinhui said. However, specific details on the four former projects were unavailable, and he declined to disclose the nature of those under discussion.

Sinohydro will operate the 194-megawatt Kamchay dam for 40 years before transferring management to Cambodia. Foreign management of dams in Cambodia is the only inroad for such large-scale projects at present, University of Cambodia business and economics lecturer Chheng Kimlong said yesterday.

“What ministry could manage this project right now?” he said. “It’s not cost effective for the government to run these things. That’s why they’ve opened up to the private sector.”

The greatest problem posed by foreign private companies operating in Cambodia is a lack of governmental control over environmental impact, Chheng Kimlong said.

While companies like Sinohydro offer the Kingdom a wealth of green technology, the government does not yet have the means to regulate them.

“This makes it harder for the government to make sure that the technologies these companies use don’t harm the environment,” he said.

Chinese companies, once scorned by activists for their disregard for the negative social and environmental impact of their projects in Cambodia, have made recent progress in this regard, Chheng Kimlong had said earlier, citing a moratorium on another Chinese dam project due to environmental concerns.

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