Cambodia Heralds A New Era In Energy Cooperation With China

In a landmark ceremony in Cambodia, Prime Minister Samdech Techo Hun Sen and the Chinese Ambassador to Cambodia Xiong Bo were present to observe closure of the water gates of the 400-megawatt Lower Sesan II Hydropower Plant, Cambodia’s largest hydro-electric dam, which will commence operations in November and which began construction in 2013. The plant construction includes eight turbines having a capacity of 50 megawatts each with all eight turbines expected to be fully operational within 12 months.

The project is a joint venture between Huaneng Hydrolancang International Energy which holds a 51% stake, Cambodia’s Royal Group which owns 39% and Vietnamese EVN International Joint Stock Company which has a controlling interest of 10%.

The plant is expected to be operational for 40 years and is estimated to produce around 1.9 billion kilowatt-hours per year. Electricity production will be sold to the Electricity of Cambodia at the fixed price of 6.95 US cents per kilowatt-hour. Once fully operational it is expected to generate around $30m USD dollars per annum in tax revenues.

The project itself represents a milestone achievement in allowing Cambodia to develop energy independence. Previously Cambodia’s north-eastern region has largely relied upon electricity imported from neighbouring Laos. Residents in provinces located in this region will soon have access to both long term reliable supplies and at cheaper prices. Whilst hundreds of families have accepted compensation and have been relocated to new villages, the benefits of socio-economic development and poverty reduction are seen too far out way the downsides to such a project.

This project is further testimony to the cooperation that we see under the auspices of the One Belt One Road (OBOR) initiative. China is currently the largest developer of hydroelectric dams in Cambodia having invested in a total of seven dam projects. The Lower Sesan II Hydropower Plant is however seen as a key achievement in energy cooperation between China and Cambodia. To put this in context, the Cambodian government has now expanded electricity supplies to around 80% of the kingdom’s total villages and a total of 2m households, or 61% of the population, were also connected to the grid.

What this clearly demonstrates is that nations such as Cambodia continue to make strides forward in reaching their aspirational goals to become an emerging market with assistance, in this case, via China. The OBOR continues to provide them with opportunities to develop their economy and to tackle poverty and other social issues.

It continues to surprise us just how poorly understood the OBOR initiative continues to be in western nations such as the US and the UK. Perhaps though, the most important questions everyone in these nations should do is ask themselves why are we not making similar investments in these nations and why do we continue to focus on the threat of war, regime change and imposing sanctions on those nations who refuse to bend to our will? The days of deluding ourselves that it is in the name of democracy should be long over. Furthermore, future trust will be a key ingredient which nations such as the US and UK should not take for granted in the coming paradigm shift.

1 Comment

  1. The last paragraph is particularly telling. Western nations need to get on board or they risk missing out on the huge economic benefits of the OBOR project. Since the Global financial Crisis there has not been much to get excited about for the "real" (non-financialised) economies of the west but breaking free of the influence of the elites and banks, who have the most to lose, is not easy . The mainstream media ignores these changes so most politicians and business people remain ignorant too I guess.

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