Cambodian tycoon Ly Yong Phat has signed a US$3 billion joint-venture agreement with Thai energy firm Ratchaburi Electricity Generating Plc on what would be the Kingdom’s largest power station.

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Just under 90 per cent of the power, however, would be sold to Thailand.

The 1,800 megawatt coal-fired plant, to be built in Koh Kong province, would sell 1,600 megawatts to the Kingdom’s western neighbour, Ly Yong Phat said by phone yesterday.

Construction would start in as soon as two months, and the newly formed joint venture, KK Power, was in negotiations with Thai officials on the price at which the power would be sold, said Ly Yong Phat, now the JV’s CEO. He declined to comment on the company’s ownership structure.

“We already agreed in principle with the Thai side, but now the problem is negotiations on tariffs and linkage,” he said.

The Cambodia People’s Party senator and founder of LYP Group has stakes in hotels, entertainment, utilities, plantations and other interests in Koh Kong.

KK Power also plans to invest up to $30 million in power lines between the coal plant and the Tatay Hydropower dam in Koh Kong, Ly Yong Phat said.

Thailand’s Ratchaburi probably sought the venture in Cambodia because of the scrutiny such a project would attract at home, Suzuki Hiroshi, CEO and chief economist at the Business Research Institute for Cambodia, said yesterday.

“[Thailand] has received very strong criticism from environmentalists on projects like this,” he said, adding that the Cambodian government should conduct a proper environmental impact assessment for the plant.

Marketing the power domestically could drop power prices to $0.04, down from the current $0.17, one of the highest rates in the region, he said.

Yet the plant would far exceed the country’s demand for power.

Phnom Penh consumes about 300 megawatts of energy per year, a majority of the country’s total demand, Suzuki Hiroshi said, and about 40 per cent of that power is imported from Vietnam.

The Ministry of Industry, Mines and Energy has said Cambodia’s total demand is about 500 megawatts but will hit 3,000 megawatts by 2025.

Power lines between Koh Kong and Phnom Penh currently don’t exist, Suzuki Hiroshi said.

Cambodia’s garment industry, which accounted for 32 per cent of gross domestic product last year, cannot rely on private investment to cure the domestic energy shortage that results in year-round blackouts at manufacturing plants, Garment Manufacturer Association in Cambodia secretary general Ken Loo said yesterday.

“To resolve the energy problem, we are all dependent on the government … The private company can sell energy wherever they like. It’s a pure business mission,” he said, although he noted the high price of energy in Cambodia was a good incentive for domestic sales.

To contact the reporters on this story: Don Weinland at [email protected]

May Kunmakara at [email protected]