T HE Royal government is $4 million behind in its electricity bill and "they have

the money, they just don't want to hand it over," says the man overseeing the

rebuilding of the electricity system.

Electicite du Cambodge (EdC) - now

in the midst of an ambitious $156 million rebuilding program that will bring on

line enough electricity to power the city by mid-1996 - is trying to collect the

debt.

"It has to happen," says Peter Rutledge, chief technical advisor

with Worley International, the New Zealand company overseeing the rebuilding of

the electricity system for the United Nations Development Programme-World Bank

Power Assistance Program.

The government - by far the utility company's

biggest debtor - owes $1.4 million for this year, and $2.5 million from

1994.

In most places if you don't pay your electric bill, the remedy is

simple. The electric company shuts you off.

EdC, which is operating under

a set of old regulations as a division of the Ministry of Industry, Mines and

Energy, lacks the power to enforce such penalties. But in the future, that may

change. Plans are underway to eventually reconstitute the EdC as a commercial

enterprise.

But for the moment, the situation means that in Phnom Penh,

even though the government is months behind on its electric bill, lights still

twinkle at the Royal Palace, the various ministries and government

neighborhoods, while daily blackouts rotate around much of the city.

Even

Sieng La Presse, spokesman for the Ministry of Information, admitted that the

government is a deadbeat at paying its utility bill. "The problem today with the

electricity is collecting the money. The regular customer will pay, but the

biggest customer, the government, doesn't." La Presse said if the government

paid its bill EdC would have money for more fuel and spare parts.

Some

of the government offices do pay, like the National Assembly. But most have

arrangements with the Ministry of Finance to pay for them. Sam Bunheng, in

charge of expenditures at the Ministry of Finance, said he is discussing the

matter with the officials of the Ministry of Industry and the EdC. The problem 

goes back a long time, he said.

The government's unpaid electric bill is

very important to the EdC  because the government, plus the municipality of

Phnom Penh, consume about 30 percent of all electricity. Worely's financial

advisor Peter Thorpe says EdC generates a little over $1 million a month in

sales, which have grown a bit over the past year as service improved slightly.

Just for May, the government's share of that total was $440,000.

"EdC

would be financially viable if the government paid its bill," says an official

of an international lending group involved in the power program.

It's

unthinkable to the officials involved in rebuilding all of Phnom Penh's

electrical generators, substations and distribution networks that in a years

time, when the new facilities are coming on line, the government still won't be

paying. If it doesn't pay its share, the EdC won't be able to support the new

facilities, buy fuel and spare parts and build up reserves for future repairs

and upgrading.

So a plan is in the works that would ulitimately give the EdC

the ability to force everyone to pay, or be disconnected.

Most of the

funds for rebuilding the power stations are in the form of direct aid, but two

of the projects are to be funded by long term,  low-interest loans. That gives

the two lending agencies, the World Bank and the Asian Development Bank, some

leverage over the situation.

Michael Kennedy, legal advisor to the

Ministry of Industry under a contract with the World Bank, said the World Bank

has not yet finalized its approval of a $40 million loan for distribution system

work in Phnom Penh (the Asian Development Bank has approved its $30 million loan

for distribution work.). The loan has caveats that require EdC to run its

business properly. Specifically EdC is instructed to collect its monthly

revenues and show that it is capable of financial planning, that it will get an

appropriate rate of return on its assets, and that it can meet its debt

payments.

"There is not much point in putting in new power lines unless

the electricity is going to be paid for by the consumers," says Kennedy. He is

working with a Washington D.C.-based lawyer to draft a series of documents that

would ultimately create a new corporate EdC with regulatory powers outlined

under an Electricity Act. The bottom line is that the new EdC would have the

powers to recover revenue it is owed.

Lenders are expecting EDC to become

a money making enterprise. Consumers will have to pay their bills or face

disconnections. The philosophy is simple, according to one international lender:

"Power generation has to make money to survive. That kind of operation cannot

expect charity."