ELECTRICITY REFORM IN CAMBODIA

Cambodia lies in the tropical region of Southe East Asia. The country has an 800 km border with Thailand to the west, 450 kim with Laos to the north, while Vietnam lies to the east, along a 1,230 km border. Cambodia's coastline, opening onto the Gulf of Thailand to the southeast, is 440 km long. The physical landscape is dominated by the lowland plans around the Mekong River and the Tonle Sap lack. The Mekong flows through the country from north to south. To the east of this the land rises to the forested mountainous and plateau region. Of the country's 181,035 square kilometers, approximately 49% remain covered by forest.

1. Energy Resources

Cambodia has a large hydropower resources. There are indications of oil, gas and coal resources in cetain parts of the country, but there is a need for reliable resource assessment of determine the extecnt of the these energy resoutces. Other renewable energy sources are also available and already being used in the country, such as biomass, mainly fuelwood. Solar energy is also being tapped on R&D and demonstration levels.

Hydro - Hydropower development should be carried out to minimized the use of fuels that all are imported to cope withe the growing power demand sustainable development of hydropower, which is indigenous, clean and renweable, is the vital factor to the development of Cambodia. According to the assessment of Hydro resources in Cambodia that was funded by Austrian Government throught the Mekong River secretariat, the total Hydro potential of the country amounts more than 10,000 MW, which play the important role in the long-term stategy development, although no reliable estimated of potential has yet been made. Cambodia has one mini hydropower wiht a total installed capacit 1000 kw was operated in 1993 under France grant aid. The another one, with 12 MW was sopped running from 1979 because of civil war, the government allow to the company from China to rehabiliatate and will operated by the end of this year.

Oil and Gas - The fossil fuel resources are currently under exploaration. All commercial fuels in Cambodia are imported in the form of LPG, gasoline, diesel and other petroleum products: in average 180 thousand tons/year from 1985 to 1990, 250 in 1992-93m 535 in 1994-97 and 900 in 1998-2000.

Wood Energy - Eighty-five percent of Cambodia's population lives in rural areas and mainly rely on agriculture production for their livelihood and income. With increasing population growht, and a low level of efficiency of use of wood fuels for cooking and agricultural products' processing, there has been increased exploitation of the nation's forest. A Cambodia Fuel wood Project is underway that aims to improve the efficiency of utilization of wood fuels. This is showing promising results wiht dissemination trials achieving substaintial efficeincy improvement.

Coal - During the period 1958-61, a mineral survey mission from China reported indications of coal in Kampot Kampong Thom, Kratie, Stung Treng and Battambang provinces. One deposit in Phum Talat, in Stung Treng province has been identified and the reserve has been estimated around 7 million tons, the exploitation might be feasible for application in cement production and for domestic fuel. The assessment and feasibility studies are needed to conduct an inventory of coal deposits in Cambodia. The promotion of the Clean Coal Technology is an importang strategy involving in coal-fired plants and the feasibility studies are needed for such generation at the coal mines, as well as for the coal trade.

Solot energy - Cambodia has a tropical climate with favorable conditions for the utilization for solar energy. Measurements during 1981-88 at Phom Penh shows average susnshine duration of 6-9 hours per day, indicating consirable potential for solar energy utilization. Application of PV system is a relatively recent development in Cambodia. Like in many other countries of the region, PV application in Cambodia started with a few installations donated by international organizations and donor agencies such as UNICEF, NGOs, Red Cross, Sida, and FODEM. The main PV applications in the country have been in health centers and rehavilitation centers. Solar home system (SHSs) and lighting system have also been installed as demonstration units.

2. Regional Interconnection

Power Interconnection with Thailand

The Power Co-operation Agreement (MOU) with Thailand was singed in 3 February 2000. This MOU provide a framework for broader the power trade and technical assistand between these two countries and open the power access to the third countries. It encourages the joint utilisation of the existing natural resources of the two countries. When the power pool is established both countries can be participated widely in term of recieve and supply the power. The feasibility of the project is completed in 2000. The estimated cost of the project is US$20 Million. The Power Purchase Agrrement (PPA) and the Implementation Agrrement (IA) will be signed separately. The project is expected to be commissioning in late 2004.

The Medium Voltage at level 22 kV links to the area along the border. Recently agreement was reached with the provinces near the border. There are seven places have connected from Thailand.

Power Interconnection with Vietnam

The Power Cooperation with Vietnam was signed in 10th June 1999. The agreement aims at the Co-operation in Power Sector among the two countries. The supply the power to the areas along the border by medium voltage line and interconnection between high voltage link are encouraged.

The High Voltage Power Purchase Agreement (PPA) with Vietnam will subject to be revision of the tariff every five year. The tariff is Time of Use (TOU) basic. The commisioning date for the project is expected in early 2004. The report on the feasibility study was completed in March 2001 and government has approved it as the priority project. The project cost is estimated US$45 Million.

Power Interconnection with Lao

The Power Cooperation Agreement with Lao was signed in 21 October 2000. The agreement aims at the Co-operation in Power Sector among the two countries. The supply the power to the areas along the border by medium voltage line and interconnection between high voltage link are encouraged. According to the potential for cooperation of both country is still low, the cooperation is in the technical transfer stage. However there are possibility to link the two countries system through medium voltage (22 kV or 33 kV) and the high voltage (115 kV) . The expectation of linking the both countries' system commences from 2004.

3. Current Status of Electricity

The electricity sector is very small in size and ins in an early stage of development. The responsibility for the coordination of electricity sector policy, planning and development rests with the Ministry of Industry, Mines and Enery (MIME). The country is serve by small isolated power systems. These systems can bed divided into two parts:

• Phom Penh and six big provincial towns served by Electricite du Cambodge (EDC)
• The rest of the country served under the responsibility of MIME and will moved under EDC responsibility accordingly.
• Only 15 per cent of the households in Cambodia have access to electricity and per capita of the energy consumption acconted for 50 kilowatt-hour per annum. It is lowest ration among East Asian Countries. The most electricity supply is in the provincial capitals and towns. Only 8.6% of the rural households assess to electricity. According to the current target of the Government, the rural electrificatio ration will be 25% in year 2010 and 701% in 2030.

Generation - Total installed capacity in Cambodia is 150 MW in which 75 percent of the Country consumption is in Phnom Penh about 112 MW, while 38 MW is Provinces. Power genreation is genrated by using Light Distillaged Oil (LDO) which is approximately 47% and 53% is Heavy Fuel Oil (HFO). In Phnom Penh, Energy generation per year 2000 was 415.14 GWh including 208.28 GWh purchased from IPP-I, 13.25 GWh from Jupited Company and 5.39 GWh from IPP-GTS Company in Kompong Cham Province's system.

4. Power Sector Reform

Establishment of Power Strategy - In January 1999, a Cambodia Power Sector Strategy was promulgated by the Ministry. This strategy provides a comprehensive development framework for the development of the power sector within twenty year period. This document as it covers all aspects of the sector's development: Generation and Transmission Master Plan, Rural Electrification, Electricity Trade, the sector's Regulatory Framework and Commercialization/Private Participation. Since completing the Strategy, the World Bank has prepared a report on the Combodian Power Sector Strategy (June 1999). This report together with other inputs will be taken into account in revising the Strategy for consideration by the Government as its policy on the sector's development.

Establishment of State-owned Limited Liability Company

The Royal Government fo Combodia has initiated an electricity sector reform process in March 1996 throught the ussuance of a Royal Decree that separted the Electricite du Cambodge (EDC) from the Ministry of Industry, Mines and Energy (MIME). The EDC was made a wholly, state-owned limited liability company of the Government to generate, transmit and distribute electricity throughout Cambodia. EDC has its own board of directors and operates with considerable independence except in the fiedl of tariff setting (responsibility of Electricity Authority of Cambodia (EAC). Its charted empowered to provide a nonexclusive, full electricity service for the whole country. At present EDC supplies electric powere to Phnom Penh and six big capital towns of the provinces. The largest system in Pnom Penh, which has a population of about 1 million and 100,000 customers accounted for 75 percent of the country's consumption. EDC has installed generating capacity of 115MW.

Establishment of a Regulatory Framework for the Electricity Sector.

Electricity Law was promulgated on 2 February 2001, and the Electricity Authority of Cambodia (EAC) was created as in independent regulatory framework. The purposes of establishing the Independent Regulatory Framework are to:

• create favorable conditions for capital investment in the commercial operation of the electricity sector.
• protect the rights of consumers to supplies of realiable electricity at reasonable
• cost
• ensure that the provision of electricity power services are governed by the principles of efficiency, quality, continuity, adaptability, non discrimination, transparency and wherever practical, competion.

  • Efficiency - the Authority required to achieve economic efficiency in the sector and particularly minimize the short and long run costs of providing electricity services.
  • Quality and Continuity - reducing cost of services must be balanced with providing a good quality service and continuity of supply. The Law requires that MIME specify performance standards and that the Authority requires all suppliers to avide by these standards.
  • Adaptability - the Authority will need to ensure that the electricity supply network can change and develop. To do this it will need to ensure that in issuing licenses the periods and terms of these licneses are not such that they limit unduly interconnection of different parts of the Grid and restructuring of the sector to improve efficiency.
  • Non-Discrimnination - it is important that all classes of customers within specific geographic areas have equal non-discriminatory access to electric services.
  • Transparency - The EAC will need to gain the confidence of the public and particularly consurmers, electric sector utilities and the Government. Transparency will bed very important in gaining this confidence. EAC will be required to report annualy to the Government on its activities an daudited accounts. This report will also be made available to the public. The EAC will also required in issuing licenses and in making other decisions to take into account Government electricity sector policies and plans. This will ensure a good two-way interaction between the Authority and Government. Transparency will also be achieved by implementing sound public participation procedures, which are required to be specified for issuing licenses, setting tariffs, and issuing regulations. All its proceeding will also be accessible to the public except when confidentialy precludes this.
  • Competition where practical - the Authority is required to promote competition where practical. Many parts of the sector are subject to economies of scale. For example, the capital cost of a 1801 MW genration plant per unit of output iw around US$500 per kilowatt whereas that of a 20 MW plant between US$800 to US$1000. There ae therefore great benefits in isntalling large generation units connected to the grid system. System economics will therefore limit the extent of open access to the grid system but there can be competitive bidding by generationg companies for supply of the required generating capacity. Competition can also be stimualted by connecting Cambodia's grid to to grids of neighboring countries and distributors allowed to choose between contracting generation in Cambodia or recieving supplies from generators in neighboring countries

Establishment of Rural Eletrification Fund (REF)

The 1999 Socio-Economic Survey that found 7.6% of the rural population using electricity, and the 1998 census found 8.6% of the rural populatio using electricity. Community or privately operated small grids are most common, followed by small generators that supply individual households or small cluster of neighboring householes. The electricity pricing in rural aeas is high range of US$0.50 -0.70 per kWh. In this case of high cost of electricity so the government create a stategy for rural electrification development to alleviated poor people. The poor people can have access electricity with cheap price. By this way the Cambodian Government wiht assitant from the World Bank will establish an organization of REF to subsidy the investment of small scale public or private genrations. The intention is to set up the REF as a fund, which is co-finnaced by three sources:

• by the World Bank through an IDA loan.
• by international (including GEF) and bilateral donor grants.
• by a small off-grid electrification fee, which is imposed on the transmission of electricity, and therefore, in the end, paid by consumers in distribution areas that are connected to the national grid.

5. Private Participation Policy

The Royal Government has made effort in introducing the concept and in building capacity and establishing the management framework to encourage stakeholders participation in implemetation of agreed actions. Cambodia has been promoting private sector paticipation and advocates the ideals of free market competition. also the establishment of a clear target and quantitiative goal is a key feature for monitory progress in implementation, reviewing and resetting objectives and targets. The energy policy is developed in close cooperation with stake holders other than different misnistries and private sector, espicially in hydropower development which is often paid through internaitonal financial instittutions, stakeholders involvement is a condition for appropriation of funds. the stakeholders need to know the benefiets from the process of the sustainable strategy by a transparent organization of works to attract public support through dissemniantion of information. Because of the huge growth in power supply, the infrastructure requirements were not affordable and the government decided to create conditions to encourage private participation in power sector. The situation in Cambodia has been significantly improved, laws have been promulgated in many fields especially in investment. At the core of the changes taking place in the electricity industry, the investment mobilization will play an increasing role especially towards the realization of the ASEAN Vision 2020.

6. Concluding Remarks

During the past year, Cambodia has made considerable progress on developing its electricity sector policies and strategies and electricity reform. Electricity trade with neighboring countries is an essential part of our policies and strategies, which have the objective of providing affordable electricity an dimproved access to electricity to Cambodia's people.