Japan Bank for International Cooperation (JBIC) has signed an ODA loan agreement totalling up to 165;2.632bn yen with the government of Cambodia to finance the Greater Mekong Power Network Development Project (Cambodia Growth Corridor).
This project will extend 230kV double-circuit transmission lines for a total length of about 78km from Kampot to Sihanoukville in the Cambodia Growth Corridor and construct substations and a distribution system.
The purpose of the project is to improve the investment environment by increasing the power supply capacity in the area. This new ODA loan project is expected to further improve the investment climate in Sihanoukville where one of the special economic zones (SEZ) has been developed under another ODA loan project. This loan is cofinanced with the Asian Development Bank (ADB), with JBIC financing the construction of transmission and distribution lines, while ADB finances the construction of substations and consulting services. The capacity building for the executing agency, Electricita du Cambodge, will be jointly supported by JBIC and ADB.
Cambodia, one of the countries of the Mekong region, has witnessed a stable political situation and solid economic growth for the last several years. There still remains a sizable economic gap between Cambodia and the original Asean member countries (such as Thailand and Malaysia), in terms of income and living standards.
‘It is therefore high on the country’s agenda to bridge these gaps and move forward for the Development of the Mekong region’ through regional cooperation. The fact that the electrification rate in Cambodia remains one of the lowest in the region due to the lack of generation capacity and a nationwide transmission network indicates the necessity of urgent improvement in the power supply in Cambodia.
Additionally, its heavy dependence on imported oil for fuels has pushed up electric utility rates to two to seven times higher than those in the neighbouring countries. The network formulation by its connecting to other transmission lines under construction with the assistance of other donors, will enable the area to receive an affordable and reliable supply of power from Vietnam.
Considering the significance of the development of Mekong region, Japan has been committed to the region in a larger scale. At the East Asia Summit held in January 2007, Prime Minister Abe announced that the Mekong region would be designated as one of the ODA priority regions for the coming three years, and that Japan would increase ODA assistance for countries in the region. JBIC will continue to provide comprehensive support for improving the investment climate and invigorating economic activity through its financial assistance for the economic infrastructure development necessary for the economic growth of Cambodia.