THE $26 million rehabilitation of the Kirirom dam has fallen on its face, and international

dam builders have walked away too from the 120-megawatt Kamchay project in Kampot.

The decisions may have clouded the investment climate - and local hopes - for a raft

of new Cambodian hydropower projects.

Kirirom was the most straightforward of all the country's dam projects. Built in

1968, damaged and closed by war in 1970, it simply needed fixing.

The Mekong River Commission carried Kirirom in its 1996 work program as a "special

case": the ten megawatt plant was Cambodia's "highest priority"; it

would increase Phnom Penh's generating capacity by 38 per cent; reduce Cambodia's

dependence on imported fuel and save on foreign currency; and, the MRC said, "the

project will be funded by Austria and Sweden."

In a document presented to aid donors in Tokyo this month, both Kirirom and Kamchay

(an $840,000 feasibility study) were described as "funded."

The Cambodians thought so too, lauding Kirirom as signed and sealed in Sept 1994.

First Prime Minister Prince Norodom Ranariddh, with local TV cameras on tow, inspected

the site the following month. As many as 5,000 soldiers have been stationed there

guarding the site.

Austria was to have spent $11m fixing the penhouse, powerhouse and equipment, and

Sweden $15m on a 110-kilowatt transmission line to Phnom Penh.

Despite the hype, it seems that a written agreement for Kirirom was never struck.

Austria, expriencing belt tightening in Vienna and with a bill now due to the European

Community, is understood to have pulled out.

Sweden cannot proceed with the transmission line unless the dam is fixed anyway.

Regardless, the Swedish aid delegation in Tokyo pointed out that it wanted to refocus

its Cambodian aid budget, saying: "economic growth has been regionally unbalanced...

[toward Phnom Penh]" and not enough attention paid toward health and education,

nor to vulnerable groups affected by insecurity and poverty. Sweden also spoke of

attention having to be paid to environmental degradation.

Ith Praing, secretary of state for the Ministry of Energy, said the ministry had

not heard formally from either Austria or Sweden. "If the Austrian government

can't finance the [Kirirom] power plant, the RCG will ask Sweden. If they can't sponsor

the whole project, we will ask the [World or Asian Development] Banks, or the private

sector," Praing said.

The shelving of the Kirirom deal will also affect another dam deal in the pipeline:

the $200 million, 18-megawatt Prek Thnot dam, which would also irrigate 34,000 hectares

of land.

Prek Thnot was to have hooked into the Kirirom power line. However, while sources

say the Japanese are keen to study and build the Prek Thnot dam, a number of ministries

in Phnom Penh - energy, public works, rural development and agriculture - all want

the deal under their own jurisdiction, and accordingly it has been stymied for about

a year.

Kirirom was also to have been a key ingredient in the development of the port city

of Sihanoukville.

Praing also said there had been no word from the Canadian consortium of CIDA, Hydro-Quebec

and Pommerleau about beginning a feasibility study on the Kamchay dam.

Similarly to Kirirom, Kamchay was lauded by Cambodian officials as "clinched"

in November 1994. It was to be the first build-own-operate (BOT) project in Cambodia.

BOT projects - where private investors pay to build a project and run it for profit

for a period of time before giving it back to the State - have been lauded by international

institutions as a foolproof way of getting State infrastructure built with private

money.

Environmentalists are just as vocal in criticizing the BOT concept because private

firms have little accountability toward social and environmental costs, and the State

eventually inherits an aging project with associated maintenance costs.

Kamchay was significant in its sheer size: 120-megawatts far outstrips Phnom Penh's

present energy needs.

Pommerleau has already finished a pre-feasibility study, but when the firm asked

CIDA for money for a full feasibility study, CIDA insisted that it first come up

with guarantees that someone was willing to pay for the entire project - an impossibility

unless the feasibility study was already completed, said one source.

"It was an elegant way of [CIDA] saying 'Thank you very much but we're not interested

anymore'," one Pommerleau official told a Canadian source.

The source said that CIDA was growing dissatisfied with the trouble that BOT projects

were attracting, and also implied that Vietnam rather than Cambodia was the more

attractive place to invest.