A major electricity shortage in northwest Cambodia, including around the tourism hub of Siem Reap, is being fixed with the help of an US$8mn loan from the Asian Development Bank to build power lines that will import electricity from neighbouring Thailand.

The development will be a boost for the regional economy, not just in tourism but also in agriculture, mining and manufacturing. As demand for power grows, it will also reduce emissions as businesses will not have to invest in new diesel-powered electrical generators.

“This will give the region access to cheaper electricity and a reliable supply,” says Tomas Norton de Matos, a senior structured finance specialist with ADB. “It is also promoting regional cooperation because the electricity will be supplied by Thailand. We worked closely with Thai Exim Bank to enable this project, which also includes trade in Thai equipment and services, to proceed.”

ADB’s board of directors agreed on June 27 to loan the money to the (Cambodia) Power Transmission Lines, a private Cambodian company. The high-voltage grid lines will be the first to be privately-owned in the Greater Mekong Sub-region. It is the first ADB private sector infrastructure project in Cambodia.

“We are pleased to be investing in Cambodia’s critical transmission infrastructure and to have worked closely with Cambodian and Thailand authorities, and all our partners, in this respect,” says Ly Say Khieng, chairman and CEO of the company.

Northwest Cambodia, like the rest of the country, suffers from insufficient and unreliable power. There is no national grid and electricity is generated almost exclusively by small diesel plants that generate emissions. This hinders Cambodia’s ability to attract investment and promote sustainable economic activities, which are critical to reducing poverty.

Electricity in Cambodia is among the most expensive in the region because of the disaggregated and isolated small-scale systems.

Siem Reap is home to the famed Angkor Wat temples and is an important and growing tourism centre. Many hotels in the area rely on their own power generators. There are similar power shortages in neighbouring Battambang, an important agricultural centre, and Banteay Meanchey, which supports manufacturing and trading activities.

The 115kV power lines will connect with Thailand’s national grid at the border. They will then run about 221km mainly alongside National Road 5 and National Road 6 to Siem Reap and Battambang. In addition to connecting the major towns, the new lines will provide opportunities to wire rural communities along the route for electricity.

Work on the project has already started and the first section to Siem Reap is expected to be completed this month or next. The second section to Battambang is scheduled to be completed a couple of months later.

ADB’s US$8mn loan will go toward the estimated US$32mn total project cost. The balance of funding is being provided through equity, as well as loans from the Export-Import Bank of Thailand and local Cambodian banks.