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Government to cut power subsidies

Government to cut power subsidies

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A technician repairs power lines in Phnom Penh. The government is planning to drop some subsidies on electricity. Photograph: Sreng Meng Srun/Phnom Penh Post

The government will drop subsidies for high electricity use, after the Electricity Authority of Cambodia (EAC) reported losses of US$3 million between January and May this year.

Households consuming more than 200 KW/h per month will no longer receive a 100 to 200 riel per KW/h subsidy said Ty Thany, financial director of (EAC).

Improvements in the standard of living and an increasing number of middle class Cambodians in Phnom Penh were factors in the government’s decision to stop the subsidy for large-volume electricity users, according to Ty Thany.

There was no change on the electricity tariff but the subsidy for households that use more than 200 KW/h per month were reduced, he said.

“People who use more than 200 KW/h per month, have a better standard of living so they should not get the subsidy from the government anymore,” he said.

The change will impact living standards and economic growth said Yim Sovann, spokesman for the Sam Rainsy Party said.

The move would affect growing businesses and especially production and would impede efforts to compete with the flow of imported goods from neighbouring countries, he said.

The electricity price in Cambodia is high compared to neighbouring countries and Cambodia’s GDP, he said.

“In any country, once the economy is growing and living standards are improving, the government will try to reduce the price of electricity each year. Why is it that in Cambodia, where the price is already high, the government is going to increase the price?” he said.

The electricity price in some areas in Cambodia is 10 times higher than other neighbouring countries, often between 720 and 4,000 riel.

The price in Vietnam is between 150 and 200 riel per KW/h.

The high price of power tariffs is detrimental to Cambodia’s ability to attract foreign direct investment, Hiroshi Suzuki, CEO and chief economist at the Business Research Institute for Cambodia, said.

“The price in Cambodia is almost twice compared with neighbouring countries,” Hiroshi Suzuki said.

To contact the reporter on this story: May Kunmakara at [email protected]

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