Logo of Phnom Penh Post newspaper Phnom Penh Post - Another power deal for senator

Another power deal for senator

Another power deal for senator

The opposition has raised conflict-of-interest concerns over another agreement headed to the National Assembly today guaranteeing the government will buy electricity from a power plant to be constructed by a company owned by ruling party Senator Lao Meng Khin.

However, it was unclear yesterday whether the guarantee to buy electricity from a 135 megawatt, US$181 million coal-fired plant to be built by Cambodia International Investment Development Group Co Ltd in Preah Sihanouk province is new or part of an existing deal.

In June the National Assembly passed an agreement, after gagging opposition questions, guaranteeing the government would buy electricity from a 270 megawatt plant to be built by the firm at a price observers said appeared to be the highest for power seen in Cambodia – 8.43 cents per kilowatt hour.

The duration and tax exemptions in that deal were identical to those in the guarantee headed to the National Assembly today.   

In August the Post reported that Chinese government documents revealed CIIDG, and its Chinese partner Mongolia Erdos Hongjun Holding Group, planned to begin building two 135-megwatt power plants (270 megawatts in total) in Sihanoukville in April, 2012 at a cost of $383 million.

This followed approval last December for CIIDG to construct and operate a $362 mill-ion plant in the same province.

Mu Sochua said it was not clear if the deal was new or part of an existing agreement, but added she did not understand why the same guarantee would be sent to the assembly twice.

“We still have the same concerns that the public will pay for this and the quality of the coal     .  .   . will badly affect the environment,” she said.

The most recently obtained guarantee, signed by Prime Minster Hun Sen on August 29, sets the purchase price again at 8.43 cents per kilowatt-hour.

It grants CIIDG a 33-year build/own/operate licence, with a nine-year exemption from value-added tax, estimating the plant will produce 895 million kilowatt hours of electricity a year – worth about $4.6 million in revenue to the state in tax a year.

Sam Rainsy Party lawmaker Son Chhay called the deal “unbelievable” and said awarding such a licence to a firm linked to a government senator smacked of endemic corruption.  

“It’s become a habit now. And the CPP [Cambodian People’s Party] will no doubt raise their hands following the prime minister, but the opposition cannot support this bad deal made behind closed doors,” he said.

Ek Tha, a deputy director of the press unit at the Council of Ministers, said Cambodian firms needed to develop infrastructure and could not just wait “for the outsiders to help us all the time”.

“We do not want to hear that some investors are complaining about the high cost of electricity in Cambodia compared to neighbouring countries. That is why we cannot just stand and watch as foreign investors might shift to other countries.”

Son Chhay called for an independent environmental impact assessment. “It’s a tourist destination, it could pollute the area and ruin the tourist business.”

The contract provides scant detail on the plant’s location, but Ith Prang, secretary of state at the Ministry of Industry Mines and Energy, said it would be in Stung Hao district.

Electricity from the plant would be sold to the wholly state-owned Electricité  du Cambodge through a power purchasing agreement.

Erdos and Lao Meng Khin’s Shukaku group are the developers of the controversial Boeung Kak development, which has displaced thousands of families without proper compensation.

Erdos declined to comment yesterday and Lao Meng Khin could not be reached.

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