Logo of Phnom Penh Post newspaper Phnom Penh Post - Government wins plant row

Government wins plant row

Government wins plant row

7 edc hong menea

After years of arbitration, the government has been awarded compensation in a little-known dispute with the Cambodia Power Company, who had claimed nearly $300 million in damages from the Electricite du Cambodge (EDC) for violating the terms of an agreement to build and operate a power plant in the Kingdom, a government press release said.

The judgement came from the International Centre for the Settlement of Investment Disputes (ICSID), an arbitration forum between governments and foreign investors to settle investment disputes.

Announcing that the Kingdom did not violate the agreement, ICSID, part of the World Bank Group, ordered Cambodia Power Company to pay the Cambodian government over $5.6 million for legal costs dating back to nearly four years of dispute, according to a press release from the Press and Quick Reaction Unit, released on April 26.

“The award held that the Kingdom of Cambodia did not breach the agreements directly or indirectly through the actions of EDC and dismissed all of the claims brought against the Kingdom of Cambodia,” the press release stated.

Cambodia Power Company, the project company of Beacon Hill Associates Inc, a corporation from Delaware in the United States, said the government and EDC had breached a power purchase agreement signed in 1996 with Beacon Hill Associates, for the financing, construction and operation of a 60 megawatt electric power plant in Phnom Penh.

“According to [Cambodia Power Company], from 1998 to 2004 the [government] persistently breached their obligations to support the project and habitually took actions that were inconsistent with those obligations. As a consequence of the [government’s] acts and omissions, the power plant anticipated under the investment contracts was never built,” the ICSID said in its Decision on Jurisdiction on 22 March 2011.

However, details remain unclear. The tribunal’s award, rendered on April 22, is not open to the public, said Peter Turner, who represented the Kingdom of Cambodia and the EDC with his team from Freshfields Bruckhaus Deringer LLP in Paris and Billie Jean Slott of Sciaroni and Associates in Phnom Penh.

“[Cambodia Power Company] didn’t agree on the award being made public. However, the fact that ICSID ordered Cambodia Power Company to pay Cambodia for legal costs and expenses shows a comprehensive win for us,” Turner told the Post yesterday.

Cambodia Power Company did not reply to phone calls or respond to an email yesterday on whether it plans to appeal.

Turner said this would be unlikely given the results of the ICSID.

An investment lawyer who understands ICSID but asked not to be named because of the sensitivity of the matter said that the claimant may not want the details to be released because it might cast them in a negative light.

“If the claimant doesn’t agree on the award being published then this is certainly because the discussed issues at the ICSID are embarrassing for them,” they said.

A report from the World Bank and the Public-Private Infrastructure Advisory Facility said in 2002: “The project has never reached financial closure, in part because of concerns about high capital costs totaling $93 million or $1,550/kilowatt (Phnom Penh Daily, September 8, 1999). [As a comparison, recent assessments of capacity expansion in Cambodia have assumed a combined cycle gas turbine capital cost of $850/kilowatt.] Whether this project will be commissioned or not is
unclear,” the country framework report Private Solutions for Infrastructure in Cambodia said.

The ICSID and the chief co-ordinator of EDC and the Royal Government of Cambodia team was led by Keo Rottanak, the government delegate in charge of managing EDC, who could not be reached by phone yesterday.

Cambodia, as a state party to the Convention on the Settlement of Investment Disputes, is under obligation to recognise and enforce ICSID awards, as if they were final judgements of local courts, since January 2005.

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