DEC 5, 2000, M2 Communications – MANILA, PHILIPPINES — Electricity supply in Cambodia will be increased and more reliable as a result of a project for which the Asian Development Bank today approved an US$18.6 million loan. The Provincial Power Supply Project is designed to boost the productive capacity of small and medium-sized enterprises and spur economic growth.

The project will expand or replace power generation and distribution systems in eight provincial capital towns, namely Banlung, Kampot, Kompong Speu, Prey Veng, Sisophon, Svay Rieng, Stung Treng, and Takeo. Most towns will be provided with new diesel generators to meet forecast demand up to the end of 2006. Others will be connected to existing or proposed transmission lines. In Kampot, new generating equipment will supplement the 1.3 megawatts of privately-operated generating equipment. In addition, the capacity of Electricite du Cambodge, executing agency for the project, will be strengthened and turned into a creditworthy utility.

“Economic growth in provincial towns is constrained by inadequate and high-priced electricity. Despite existing high tariffs, consumers are willing to pay for an inferior supply,” says Michael Bristol, ADB project engineer. “External interventions are necessary to produce needed improvements in electricity supply.”

The country lacks adequate power everywhere except Kompong Cham, Phnom Penh, Siem Reap, and Sihanoukville. In the needy provinces, private sector operators have neither the capital nor the creditworthiness to fund rehabilitation or expansion of their systems.

As a result of the project, over 100,000 persons in 21,000 households will benefit from better electricity services.

Between 2004 to 2010, an estimated 70,000 persons in 13,000 households will receive power supply for the first time. Power bills are expected to fall by about a quarter three years after project commissioning, an important consideration for the 30 percent of beneficiaries who live below the poverty line.

The total project cost is estimated at US$24.2 million. The ADB loan will come from its concessional resources. It is repayable over 32 years, including a grace period of 8 years.

Interest will be one percent per annum during the grace period and 1.5 percent per annum thereafter. Project completion is due by mid-2004.