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Logo of Phnom Penh Post newspaper Phnom Penh Post - Power plan farce

Power plan farce

The National Assembly voted without debate yesterday to guarantee perhaps millions of dollars in payments for electricity from a power plant being built by a company owned by ruling party Senator Lao Meng Khin.

Government officials praised the project yesterday, which has come under criticism for its lack of transparency and its connection with the controversial senator, saying it would provide the Kingdom with much-needed electricity and jobs while having a minimal impact on the environment.

But opposition lawmakers walked out in protest amid lingering questions about how the concession was awarded and whether the electricity will be priced fairly. Sam Rainsy Party parliamentarian Mu Sochua posed numerous questions about the Preah Sihanouk province project during the brief hearing to National Assembly President Heng Samrin, who refused to answer or provide time for debate.

“We walked out because I asked all these questions… and then he didn’t answer anything – did not allow any discussion at all,” Mu Sochua said yesterday.

She said the prospect of holding a proper debate was “too hot” for the ruling party.

“This [decision] does not reflect a parliament that is independent, that is neutral,” Mu Sochua said.

Minister of Economy and Finance Keat Chhon expressed gratitude to the lawmakers who supported the measure and criticised the opposition for seeking further debate. He added that the government could have responded to the questions raised, but said it would have been “a waste of time”.

The Ministry of Economy and Finance had asked the National Assembly to guarantee any debts owed to Lao Meng Khin’s firm by state power company Electricité du Cambodge.

The senator’s company, Cambodia International Investment Development Group Co Ltd, earned Hun Sen’s approval in December for a joint venture with a Chinese firm to construct and operate the US$362 million plant. CIIDG subsequently entered into a power-purchase agreement with Electricité du Cambodge in January.

Lao Meng Khin also heads Shukaku Inc, which is developing the Boeung Kak lakeside in a joint venture with a Chinese firm. The project has drawn widespread condemnation for its expected displacement of more than 4,000 families who so far have not received proper compensation.

Mu Sochua, who told The Post on Wednesday that lawmakers had been given minimal information about the plant, said in parliament yesterday that the measure before lawmakers should be opposed because of the company’s connection to abuses at the lakeside and the opaque nature of the project.

“We have to have a clear understanding of the project before we raise our hands in approval. The SRP is not in support of the company linked to the Boeung Kak project, which owes the blood of the poor,” she said.

According to documents signed by Prime Minister Hun Sen on March 16 and presented to the National Assembly yesterday, CIIDG has agreed to sell power to Elecricité du Cambodge at a cost of 8.43 cents per kilowatt hour.

The documents note, however, that fluctuation in the price of coal may alter the price of the electricity. The 270-megawatt plant is set to supply the state power company with 1.8 billion kilowatt hours per year.

CIIDG will enjoy a tax exemption for VAT and income during the first nine years of its 33-year concession. After that, the government said it expects to haul in $15 million per year in taxes, in addition to an estimated $8 million for taxes on imported coal and petroleum.

The government has also agreed to waive taxes for importing machinery, construction materials and spare parts during the first year of an expected three-year construction period.

Observers expressed concern about the proposed power plant, citing the potential environmental impacts of coal to both the air and water in the tourist hub of Sihanoukville, and stressed the need for greater transparency.

Ame Trandem, Mekong campaigner for the environmental group International Rivers, said the price of electricity in the agreement – 8.43 cents per kilowatt hour – appeared to be the “most expensive” for a project she had seen in Cambodia, citing a 2009 study by NGO Forum and Probe International that said Electricité du Cambodge was buying electricity from hydropower dams and other projects at between seven and eight cents per kilowatt hour.

Mam Sambath, chairman of local watchdog group Cambodians for Resource Revenue Transparency, said he expected the cost per kilowatt hour of 8.43 cents to rise significantly, perhaps by three or four times, when it is re-sold to consumers by Electricité du Cambodge.

“I’m afraid that’s the buying price, and the selling price is more expensive,” he said.

He acknowledged the need for cheaper power for rural Cambodians, but said he was “worried” about the transparency of the project and its apparent disregard for any division between business and politics.

“How could we ensure … a distinction between the power of the legislative branch and the business sector?” he said. “Let the people examine this process as well …. We don’t want this project to be repeated like at Boeung Kak lake.”

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