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Government seeks to lower electricity prices ahead of election

Power lines in Koh Kong province in 2013.
Power lines in Koh Kong province in 2013. Heng Chivoan

Government seeks to lower electricity prices ahead of election

The Electricity Authority of Cambodia (EAC) is preparing a proposal to further subsidise electricity prices ahead of July’s national elections, according to two senior energy officials – a move that, if approved, would be in line with numerous populist promises made by ruling party officials in recent months.

The remarks came from EAC President Ty Norin during the regulatory authority’s annual meeting yesterday in Phnom Penh, which was also attended by Mines and Energy Minister Suy Sem. The government has undertaken an annual evaluation and reduction of electricity prices at the end of March for the past two years, but this year’s cut would likely be larger than previous ones, according to Norin.

“We will see the change [in electricity price] before the national election, as we are studying the fruitful result that we may gain from the price reduction,” Norin said yesterday, without specifying what that “fruitful result” might be.

The minister, too, encouraged a reduction in energy prices and urged officials to create a proposal he could then pass to Prime Minister Hun Sen for approval, also pointedly noting the step be taken ahead of the vote.

“I want the authority and EDC to do an internal study, or consider if the electricity price for factories and enterprises can be lowered a little bit more before this upcoming election,” Sem said.

In addition to lowering prices, Sem encouraged officials to be extra diligent and avoid blackouts in the run-up to the July contest, suggesting that unspecified saboteurs may cause blackouts “to make people get angry at the government to lower the popularity of the ruling [Cambodian People’s] Party”.

The CPP appears set to compete in the upcoming election unchallenged by its main competitor, the Cambodia National Rescue Party, which was dissolved by the CPP-stacked Supreme Court in a widely condemned decision in November. Even so, officials up to and including Prime Minister Hun Sen himself have been doling out populist favours to voters in recent months, including free public transportation for garment workers, and cash bonuses to certain mothers upon giving birth.

According to Norin, the government’s state-run electricity provider, Électricité du Cambodge (EDC), already subsidised electricity prices in 2017 to the tune of $51 million, about half of the company’s total revenue. The remaining revenue goes to the statue budget to fund other infrastructure projects or government services, he said.

“I am preparing a few scenario proposals for the government for approval. One is [more] beneficial to residents, compared to businesses and enterprise, while another one is [more] beneficial to businesses and industries,” he said. “Then the government can decide which option to choose, or choose both of them.”

High electricity prices have long maligned Cambodia’s industrial sector. In February, National Bank of Cambodia Director-General Chea Serey called high energy prices Cambodia’s “biggest challenge on a macroeconomic level”, and evaluations of Cambodia’s investment potential regularly ding the Kingdom’s competitiveness score due to the relatively high cost of power compared to regional neighbours.

Chan Sophal, an economist and director of the Centre for Policy Studies, welcomed any reduction in electricity prices as a smart move that would boost the country’s economy.

“Even though the government will lose some revenue, it benefits the private sector more,” he said. “The advantages could be bigger than the government’s losses.”

San Chey, head of the Affiliated Network for Social Accountability Cambodia, said yesterday that while any subsidy might be motivated by politics, it would still benefit the average Cambodian citizen.

“Any decision or any gift for people before the election is unavoidable, from the view that the government wants to gain political benefits,” Chey said. “I cannot predict how much the government can gain from this decision . . . but I think there are many things that the government needs to do, such as solving corruption, combating smuggling, improving the health sector and other infrastructure improvements.”

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