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PM rebuts cuts to electricity tariffs

The government is planning reduce electricity tariffs starting next year.
The government is planning reduce electricity tariffs starting next year. Vireak Mai

PM rebuts cuts to electricity tariffs

Prime Minister Hun Sen said last week that electricity prices cannot be lowered to 650 riel ($0.16) per kilowatt, as requested by opposition lawmakers, stating that reductions will follow a tariff reduction plan released by the government in January this year.

In a six-page letter to the National Assembly, dated May 5, Hun Sen questioned a request by Cambodian National Rescue Party lawmakers in February to set the lower tariff, and said that this could pose a threat to the stability and sustainability of the power supply business in Cambodia.

“CNRP lawmakers have requested to lower the price of electricity to 650 riel per kilowatt throughout Cambodia, while the government has just completed a study and announced plans to reduce electricity tariff on January 12 2015,” the letter read.

Currently, the electricity tariffs are set by the Electricity Authority of Cambodia (EAC), who determines the price in accordance with the Electricity Law, the letter added.

According to Ty Thany, executive director at the EAC, the electricity rate in the Electricite du Cambodge (EdC) grid is 700 to 1,200 riel per kilowatt and 2,000 to 3,000 riel per kilowatt from private suppliers.

Come March 2016, the government’s plan will reduce tariffs to 780 – 800 riel for average households, whereas households using 10 to 50 kilowatt per month will only pay 480-610 riel per kilowatt, after a government subsidy.

Hun Sen went on to question the opposition’s obstruction of development plans, and said that this will not help in reducing tariffs.

“[The reduction of tariff] is not determined either by anyone’s request or demand. Tariff reduction will be possible if there is a boost in the government’s development plan,” he wrote.

Mao Monyvann, a lawmaker from the opposition party, yesterday said he had consulted professionals in the field before making a demand for lower electricity prices.

“We proposed 650 riel per kilowatt as the tariff for all, but actually 600 riel per kilowatt will also be a profitable rate. I have talked with economists and experts that 600 riel is a possible tariff. If CNRP runs the government, we will set 600 riel as the tariff for all without any delay,” he said.

Monyvann said the lower electricity tariff will help boost Cambodia economic growth by increasing local production and the country’s competitiveness. “I have proposed the tariff. It is up to the government’s commitment to reduce it or not,” he added.

However, having just one supplier in the market also presents a challenge for a potential price discounts, said independent economist Srey Chanthy. “Given the current situation, lowering the price is unlikely given the fact that supplying electricity is almost a monopolistic business. Only EdC is supplying it, not many private companies are in the sector,” said Chanthy, in an email yesterday.

While the state-run EdC managed to produce 1,769 megawatts of power in 2013, Cambodia is expected to generate about 3,430 megawatts by 2020, from 12 hydroelectric and coal power plants, licenses for which have already been granted.

Cambodia’s power grid has been lar-gely dependent on electricity imports from neighbouring countries since 1993, with the country having to import 1,691 megawatts from Vietnam, 579 megawatts from Thailand and 10.73 megawatts from Laos to make up the deficit in 2013.

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