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Logo of Phnom Penh Post newspaper Phnom Penh Post - Private sector sheds light on provincial capitals

Private sector sheds light on provincial capitals

Electricity generation and distribution in Cambodia is mainly still in the technological

dark ages. Peter Sainsbury and Bou Saroeun, however, have found an

energy renaissance in the provinces and ambitious plans for the next 20 years.

As was seen in Phnom Penh this week, electricity supply is anything but certain in

Cambodia.

Inefficient and poorly maintained generating equipment combined with a distribution

system that is more akin to a rat's nest on sticks than to power poles and lines

has not lead to a consistency of service.

Ironically the recent two days of power outages in the capital -the first for some

months - was not due to engineering faults but rather sloppy paper work.

Ministry of Industry Mines and Energy (MIME) Under Secretary, Dr Ith Praing, said

the generating company had run out of fuel because they had not applied for the appropriate

import permits in time for 1999.

He said the fuel was in the country, but that customs officers at Sihanoukville had

refused to release it till the paper work was completed.

He said the permits were rushed through the Finance Ministry on Monday and the fuel

was now being supplied.

But even with fully fueled generators Phnom Penh's power supply is so erratic that

factories tend to generate their own electricity, which they find is more reliable

and cheaper.

And while the capital's residents put up with power problems, those in Pursat and

Kampong Chhnang are enjoying uninterrupted supply at a cheaper price.

They are the beneficiaries of MIME's policy to modernize and improve the country's

electricity generation and distribution through an amalgam of private and state owned

companies and provincial authorities.

The move is an effort to get private enterprise assistance in building up what is

capital intensive infrastructure.

Dr Ith Praing said that it was the only realistic way that Cambodia can move ahead.

"It is necessary to have private participation because the Government cannot

afford the development needed to meet the increasing demand every year," he

said.

In Pursat and Kampong Chnnang, Jupiter Power, a joint investment between local company

Jupiter and Caterpillar Power Ventures Ltd, has set up power stations in both provinces

and is currently installing a temporary unit in Battambang.

Jupiter Power Manager Mike Fogarty said that the provinces now enjoy constant and

trouble- free power supply.

He added that at the same time, electricity costs have dropped and the company is

making a profit.

A key to the Jupiter's success is the partnership with Caterpillar who provide capital

for the projects which in turn use Caterpillar products.

Fogarty said it is also a tangible sign that the company was performing well and

had long term potential not only in Cambodia but in other parts of Asia.

"If we weren't doing well we would not have Caterpiller backing us.

"It's a good business but hard work. We have got a formula and it's working

in Pursat, Kampong Chhnang.

He summed up the formula as: "Applying good management and new equipment with

a 12 month warranty."

Another key aspect of the business has been the partnership they have developed with

the provincial power authorities particularly in the area of improving their distribution

network.

He said the company had lent the authorities money to improve their power lines which

has contributed to the overall efficiency and reliability of the system.

Jupiter then generates the power and sells it to the authority who sells it to the

consumer.

He said the scheme had so far worked well and the authorities were repaying their

loans.

Meanwhile, Jupiter's Battam-bang power plant is due to be up and running within three

weeks.

It is planned that the plant will operate for about a year, during which time a new

permanent power plant will be installed.

The temporary plant is built in a series of modules and installed in shipping containers.

Fogarty said this meant they could easily transport it and get it up and running

very quickly.

Fogarty is enthusiastic about the potential business in Cambodia.

He said that they had not applied for duty concessions on equipment or other sweeteners,

opting instead to get the equipment into the country and up and running as quickly

as possible.

He said he was confident that there was money in Cambodia and the talks of recession

had been overblown.

He attributed an overall quiet business period recently to caution on the part of

Cambodians who were waiting to see if the country settled down after the election.

"Cambodians have been hoarding money for the last eight months, and anyone who

says not has their head up their arse," he said.

Fogarty is not concerned about Government policy changing and suddenly finding the

entire electricity sector taken out of private hands.

He said that they have nationalization insurance, but more importantly he believes

that their expertise and capital is their greatest asset.

He said that the power distributors he has worked with have soon recognized the benefits

of having a reliable and adequate power supply which has ensured a minimum of problems

when dealing with officials.

He said it was unlikely Cambodia could upgrade its power system any other way.

Dr Praing indicated that nationalization was not on the Government's agenda.

He said it was necessary there were benefits for both sides in a private/public system

for it to function properly.

"There has to be a rational and suitable return for the investor and the public."

He said that in some cases they would use private enterprise for a "build, operate,

transfer" project which would end up in Government hands but this would be clear

before the contract was entered into. But he added this would not affect the other

projects which were "build, operate, own" in which companies like Jupiter

retained possession of the project and on sold the power.

He said MIME's role at the moment was simply that of regulator until new regulatory

body was set up in July.

The new Electrical Authority will be responsible for licensing and overseeing generation

distribution and transfer of power in the country.

Meanwhile MIME is currently developing a broader strategy for the future.

Despite the successes of Jupiter, overall Cambodia's electric power system is in

tatters. Years of war and neglect have left a system that is archaic and inefficient.

A draft of MIME's Cambodia Power Sector Strategy 1999 - 2016 says that only

10 percent of Cambodian homes have access to electricity.

The draft plan, which Dr Praing said was not final, has a vision of Cambodia in which

the bulk of its power comes from hydroelectric generation and one gas turbine in

Sihanoukville.

The entire country would then be linked by a national grid which would also feed

into Vietnam and Thailand.

This would have Cambodia exporting power when there was a surplus and importing it

in times of shortage.

Currently the World Bank is assisting with the drafting of the plan and Dr Praing

said that they had indicated more assistance would be available for feasibility and

other related studies.

The draft includes a time table for the gradual implementation of the plan.

Stage one of the generation plan deals with the next five years.

It suggests a private developer establishing a 60 megawatt generating plant for Phnom

Penh by May 2000.

It also outlines details for rehabilitation and construction of the Kirirom and Prek

Thnot hydro projects, both of which studies indicate would be profitable.

The plan also sees the development of a 90 mw gas turbine in Sihanoukville which

would utilize offshore gas reserves.

Stage two of the plan penciled in for 2004 to 2008 would mainly be a series of studies

into the construction of a number of hydroelectric schemes.

The third stage 2009 to 2016 would be the construction of the plants.

At the same time, and also in three stages, transmission would be upgraded and constructed

to establish a national grid by the year 2016.

Part of the plan is also rural electrification and recommends spending $10m a year

for the next 10 years to get power out to isolated areas.

However, despite the apparent enthusiasm for the plan from the World Bank and their

assistance to date the cost of such an undertaking is massive.

The generation master plan would cost an estimated $1 billion while the transmission

installation would be a more modest $365 m spread over the next 17 years.

Meanwhile the more realistic proposal to "rehabilitate the power sector"

in eight provincial capitals is nearly $28 million.

The report says that the Government is currently seeking ADB funding for this project.

However for a wider generation and distribution upgrade the current estimates are

$90m over five years.

But it is not just the financial costs that may prove difficult to overcome.

The environmental impact of some of the planned hydro electric generation plants

is likely to be severe.

The Prek Thout dam could displace more than 17,000 villagers.

However supporters of the project have said that in addition to the 18 megawatts

of power it will generate and the 70,000 hectares of land it will irrigate, the dam

will save Kampong Speu from flooding.

Kampong Speu is blighted by flash floods that unlike much of the rest of Cambodia

do not have the spin off of depositing rich alluvial soil to fertilize rice paddies.

Supporters have also pointed out that some initial work has been done.

That was started in 1969 but the foreign engineers pulled out in 1973 because of

the war.

Since then much of the work has fallen into disrepair including the diversion wier,

Roland Chey.

And while there are arguments in favour of Prek Thout dam, aside from its electricity

generation potential, it is by no means certain the same could be said of the other

sites, particularly those in the northeast of the country.

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