State spending on electricity subsidies falls on back of decreasing oil prices as government says costs will drop further with Vietnamese imports

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TRACEY SHELTON

Government subsidies for electricity have dropped from $300 million for the whole of last year to $20 million for the first quarter.

THE government has announced it provided a US$20 million electricity subsidy to residents in Phnom Penh and Kandal province for the first quarter of 2009.

Speaking at the National Assembly on Thursday, Minister of Economy and Finance Keat Chhon said that keeping electricity prices down would help minimise the impact of the global economic downturn and help reduce poverty.

"The world economic crisis is showing its effect on Cambodia's economy more and more. So to fight this problem, the government must quietly continue to [reduce] electricity prices," he said.

The government put $300 million towards electricity use in 2008 in an attempt to deal with higher oil prices and the onset of the financial crisis.

Victor Jona, deputy director general of the Ministry of Industry, which is in charge of energy, said on Sunday that the subsidy would reduce the cost of electricity by almost 50 percent.

"The original electricity price should be 800 riels (US$0.19) per kilowatt. But after the aid from the government, the electricity authority will charge between 390 and 690 riels per kilowatt for people who use between 50 and 100 kilowatts per month," he said.

Victor Jona added that at present residents from about 70,000 houses in Phnom Penh and Kandal province looked set to gain from the subsidy. "Every month the government has ... been spending a lot of money to aid the price of millions of kilowatts of electricity to help keep people's living standards stable amidst the world economic crisis," said Victor Jona.

"We hope that the original price of electricity will decrease a little bit from July 2009 when the distribution of electricity from Vietnam arrives here, and then the government may no longer give as much money," he added, explaining that electricity purchased from Vietnam was cheaper than that produced from oil in Cambodia.

Cambodia last month agreed to increase Vietnamese electricity imports.