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Prices set to rise in power shake up

Prices set to rise in power shake up

M oving to stem monthly losses of U.S. $0.5 million in an outdated, inefficient

electricity supply system plagued by constant blackouts, the Cambodia

Electricity (EDC) is poised to take control of Phnom Penh's sub-station

distribution system and also intends to hike the price of electricity to around

350 riels per kilowatt hour.

The sub-stations, known as cabines, are

small one room buildings which dot Phnom Penh's streets. They are currently run

by private retailers under a licensing contract which mandates they re-sell

power to individual consumers for 180 riel per kilowatt hour. However, retailers

are known to overcharge regularly.

After purchasing power from EDC's

four generators, at a cost of 170 riel per kilowatt hour, the sale price for

end-users is sometimes as high as 600 riels per kilowatt hour.

The head

of the EDC's distribution department, Ty Norin, is sympathetic to the plight of

the retailers:

"In the contract, the retailer can sell electricity for

180 riels, only ten riels is profit," said Norin. "In one month the retailer can

sell ten thousand kilowatt hours.

"If you calculate this, he makes only

100,000 riels per month. They cannot (make) money because they have four or five

people to control. How can they pay their people with only 100 thousand riels?

They also have a problem with the cost of materials to maintain the network." he

added.

The EDC's four generators, some of which were installed in the

1920's have a maximum output of 23 megawatts (MW), and are unable to supply the

70 MWs Phnom Penh requires. Juggling this small amount of power throughout the

city is what causes regular blackouts.

According to the EDC's director,

Tan Kim Vinn, seven MWs is reserved for a guaranteed supply to the Royal Palace,

key government ministries and certain private businesses. During daylight hours,

total power output is reduced to 16 MWs.

Funds from the World Bank and

the Asian Development Bank (ADB), according to Vinn, will be used to repair the

system and to increase output.

"The World Bank will initially lend us

U.S. $6.7 million," said Vinn. "A World Bank delegation which visited Phnom Penh

planned that we should buy four General Motors generators, which would have an

output of 2.1 MWs each. When they returned in December we decided to purchase

one generator with 10 MWs of power; they are now making up a tender document. We

expect to borrow a further U.S. $20 million from the World Bank to purchase

three more generators with 10 MWs output each," he added.

"The ADB has

lent us U.S.$18.2 million. With the help of a Japanese company, U.S. $15 million

will be used to repair the distribution system," Vinn said.

According to

Vinn, repairs to the city's wiring system will be labor intensive and costly,

but if the EDC is to benefit from the money it spends on increasing the output

from its new generators, Phnom Penh's ancient and dilapidated wiring system must

be improved.

Electricity leaving a cabine is often dissipated along a

tenuous line of tangled cables; within 100 metres the voltage may drop

precipitously from its original 220 volts, and at the far reaches of an

overextended network it can be as low as 80 volts.

The EDC views the

cabine retailers as an impediment to repairing the wiring, and intends taking

over the entire system.

At present the cabines are licensed to 160

independent retailers, many of whom have little regard for their contract

obligations. When a meeting of cabine contractors was convened by the EDC on Dec

18 last year, one operator who is responsible for cabines 041 and 042 declined

the invitation. Three days later, in a move to test out a revamped

administrative structure, the EDC revoked the licenses of cabines 331 and 332

which supply electricity to the Chbar Am-peou area in the south of Phnom Penh,

east of the Tonlé Bassac river.

Cheau Tay is a member of a consortium

which held the licenses for 331 and 332. He is a tall, quiet businessman who

runs two hotels in the Olympic market area, and was reluctant to discuss the

EDC's revocation of his license.

"I have rarely visited the cabines

because I have been too busy with my work," Tay said, adding "I don't remember

[last year's meeting with the EDC], it was a long time ago."

The cabines

at Chbar Ampeou, now under EDC management, are selling power for 300 riels per

kilowatt hour. The EDC is testing out a new pricing scheme to determine an

appropriate ceiling for the sale of electricity. The cabine finance

administrator within the EDC, Me Men Sarun, is pleased with the initial

results:

"The cabine at Chbar Ampeou has made seven million riel in 11

days," said Sarun. "We expect to make 20 million riel, and when the cabine is

repaired this could go as high as 40 million riels per month.

"In the

past we received six million riels per month from the retailer," Sarun

commented.

Moved from his position at the EDC head office to

administrate a cabine, Sey Tuon, isn't surprised at the amount of repair work

required: "When we took over this cabine we found that the equipment inside was

very old and in need of repair," lamented Tuon. "The wiring has to be replaced

and the meters have to be removed and fixed."

Not all retailers are as

careless in operating their electricity sub-stations. For some attentive

entrepreneurs, the revenues from a higher price charged per kilowatt hour are

used to pay for generators which keep the juice flowing when the power supplied

by the EDC is cut off. Ty Norin acknowledges that he knows of at least four

retailers who have set up their own generators to provide a back-up system for

the city's irregular power supply.

"At the meeting on Dec 18 the cabine

operators disagreed with the government's plans," said Norin. "In my opinion

there are two different cabine operators: One earns his money from this job, he

is not happy. But the other cabine operator, he is all right."

The EDC is

cautiously optimistic that it's plans to take over the system will be

successful. Reports of intimidation of EDC staff by employees of cabine

retailers include being locked inside the sub-stations, having stones thrown at

their cars and one hapless employee who was wounded in a "power" shoot

out.

As an EDC employee who asked not to be named, said: "It was much

easier to give the operation of the cabines to the retailers than it is to take

it back. The EDC intends eventually to take over the operation of all of Phnom

Penh's cabines. "At the moment we are operating two and then we will takeover

others which are losing power and charging high prices," he said, while using

the Khmer expression "mey kjal" (chief of the winds) to describe EDC's

actions.

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