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Government approves law to guarantee energy purchase

Government approves law to guarantee energy purchase

The National Assembly approved a draft law yesterday that will guarantee the state’s purchase of electricity from two large-scale private energy projects, protecting the investments against any loss resulting from political instability.

The proposed legislation mandates a power purchase agreement for electricity distributed by a 220-kilometre transmission line that Alex Corporation is building to connect the Stung Tatai hydropower dam in Koh Kong province to Phnom Penh, and energy produced by a 150-megawatt coal-fired plant that Cambodian Energy II Co Ltd (CEL2) is developing in Preah Sihanouk province.

According to a National Assembly announcement, the law would guarantee that the government would purchase all power transmitted or generated by each project regardless of whether or not the state-owned Electricite du Cambodge (EdC) has the financial capacity to do so. The legislation authorises the Ministry of Economy and Finance and the Ministry of Mines and Energy to purchase any excess energy from the two projects.

“The government will provide two types of guarantees that include a purchase agreement of electricity in case EdC cannot pay, and to guarantee the purchase of the infrastructure investment from the projects in the case that the companies cease operations due to political instability,” the announcement said.

The announcement also gives Alex Corporation room to double its project design, increasing its planned 230-kilovolt line to 500 kilovolts under the existing contract.

In February, the Council of Ministers gave Alex Corporation a green light to develop its $136 million transmission line project. The project is expected to be completed within three years. The $260 million CEL2 coal-fired plant, announced at the same time, is scheduled to be completed by late 2019.

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