A KOREAN company plans to spend US$1 million to build Cambodia's first electrical transformer plant, officials said Wednesday.

The company said it hopes the equipment will cut imported electricity costs and reduce the number of power blackouts in the capital. "We have imported the raw materials and machines from Korea, with workers trained by our own specialists," said Jung Moon-soo, general manager of Camko First Transformer Co.

The new transformer plant will be built in Kantok Cheung village in Kandal province by a Cambodian-Korean developer.

Jung said Cambodia's expanding economy has made power shortages a vital issue.

"We need one more year to finish the plant and assemble qualified workers," Jung said.

Ith Praing, secretary of state at the Ministry of Industry, Mines and Energy, said the new plant would help to significantly cut imported energy costs.

"Transformers are crucial for changing electricity from high to low current for residential or commercial use," he said.

But he added that Cambodia needs more foreign investors to modernise its power sector to keep pace with rising electricity needs.

Cambodian Economic Association President Chan Sophal said the country's electricity fees are high compared with regional neighbours, deterring investors. "When we have more companies investing in transformers, electricity costs will drop and supplies will increase," he said.