THE National Assembly this week approved legislation that would require the government to cover any financial losses incurred by two new Chinese hydropower projects in the event of political instability, a senior minister said Tuesday.

China National Machinery Corp and Michel Corp signed an agreement with the government in June 2008 to invest more than US$1 billion in dam projects in Pursat and Koh Kong provinces.

"The passage of this legislation will allow the companies to start work immediately in the dry season," said Minister of Industry, Mines and Energy Suy Sem.

"In case of any political incident that causes these operations to suffer losses, the government will be responsible," he added.

The two projects are expected to generate a total of 584 megawatts of power, which Suy Sem said will be sold to Cambodia's state power provider, Electricite du Cambodge.

Power shortage

With no national power grid, Cambodia remains starved for power and must import most of its electricity from Vietnam and Thailand, leading to some of the highest utility rates in the region.

This has proven to be a major obstacle in attracting foreign investment, officials have warned.

Opposition lawmakers, however, said the deal gave the Chinese companies control over the power plants for too long, and that even with the additional generation, electricity would remain too expensive.