Cambodia: Medium-Voltage Sub-Transmission Expansion Sector Project (former name: Rural Electrification Project)

Sovereign Project | 42361-013

Summary

The proposed project will expand the supply of reliable and cost effective grid-electricity in Kampong Thom, Kampong Cham, Siem Reap, Kandal and Banteay Meanchey province in Cambodia. It will (i) expand the electricity transmission infrastructure by constructing 2,110 kilometer (km) of 22 kilovolt (kV) sub-transmission lines , (ii) support the implementation of the project, and (iii) improve the operational effectiveness and efficiency of Electricite du Cambodge.

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Procurement Documents


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Project Name Medium-Voltage Sub-Transmission Expansion Sector Project (former name: Rural Electrification Project)
Project Number 42361-013
Country Cambodia
Project Status Approved
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2979-CAM: Medium-Voltage Sub-Transmission Expansion Sector Project (former name: Rural Electrification Project
Asian Development Fund US$ 45.00 million
Loan 8264-CAM: Medium-Voltage Sub-Transmission Expansion Sector Project (former name: Rural Electrification Project)
OPEC Fund for International Development US$ 10.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Partnerships
Sector / Subsector Energy - Energy sector development and institutional reform
Gender Equity and Mainstreaming Some gender elements
Description The proposed project will expand the supply of reliable and cost effective grid-electricity in Kampong Thom, Kampong Cham, Siem Reap, Kandal and Banteay Meanchey province in Cambodia. It will (i) expand the electricity transmission infrastructure by constructing 2,110 kilometer (km) of 22 kilovolt (kV) sub-transmission lines , (ii) support the implementation of the project, and (iii) improve the operational effectiveness and efficiency of Electricite du Cambodge.
Project Rationale and Linkage to Country/Regional Strategy

Cambodia's power sector was severely damaged during long periods of conflict and civil war. Private independent power producers using their own generation from imported diesel and heavy fuel oil were engaged in 1994 to provide electricity to main load centers such as Phnom Penh, Sihanoukville, Siem Reap and other provincial towns through isolated systems. Since 2005, a primary focus of power development has been to build high-voltage (230 kilovolts [kV] and 115 kV) and medium-voltage (22 kV) sub-transmission lines to import electricity from neighboring countries to provide affordable services, building demand, and facilitating grid extension by connecting the isolated systems. By 2012, four high voltage lines were in operation, three at 115 kV (414.95 km) and one at 230 kV (91 km). Development of three distinct grid systems-in the southern, eastern, and northeastern economic zones - is progressing.

The rate of household electrification in Cambodia at about 35% (as of end 2012) remains among the lowest in Southeast Asia. In Cambodia, 80% of the population lives in areas outside of provincial and district towns. Only 9.3% of households living in these areas are connected to grid-electricity supply mainly through isolated systems owned and operated by private rural electricity enterprises (REEs) that generate their own power from imported diesel and heavy fuel oil. More than 11million people use rechargeable car batteries as a source of electricity supply and kerosene and candles for lighting.

Electricity supply from rechargeable car batteries and REEs is expensive. In areas supplied by REEs, electricity tariffs are highly volatile with the variation in fuel price and range from $0.65 / kilowatt-hour (kWh) to $0.90 / kWh. For electricity from rechargeable car batteries, the cost averages $1.00 / kWh

In addition to being expensive, electricity services from isolated REE operated systems are generally unreliable and of poor quality. The limited and often unreliable electricity supply, coupled with high electricity costs, severely constrains quality of life. Domestic firms and foreign investors identify the high costs and supply shortages of electricity as a main constraint to doing business in Cambodia. This is critical, especially as the government aims to diversify from garments to other sources of growth such as commercial rice farming, other agribusiness, tourism, and light manufacturing.

Institutional Arrangements

The key organizations in Cambodia's power sector are the General Department of Energy (GDE) under the Ministry of Industry, Mines and Energy (MIME), the Electricity Authority of Cambodia (EAC), Electricite du Cambodge (EDC), private rural electricity enterprises (REEs), and other private domestic and foreign investors.

GDE guides and supervises the development of the power sector and is responsible for overall energy planning, policy and strategy. EAC is the country's regulatory agency, responsible for issuing rules, regulations and procedures and regulating the power market operators, both suppliers and users. EDC, the country's national power utility, is responsible for electricity production, transmission, and distribution in licensed areas assigned to EDC by EAC.

To supplement the capability of EDC in the development of power sector infrastructure, the government is encouraging the private sector to invest. The promotion of private participation in electrification is also anchored in Cambodia's Electricity Law (2001). The REEs represent an important private-sector based framework for developing, operating and maintaining the country's distribution network. In addition, private domestic and foreign investors are encouraged to invest in (i) oil and gas exploitation, (ii) energy generation from indigenous resources such as hydropower, and (iii) developing the high-voltage transmission system.

Subsector Problems and Constraints

Technical sustainability. Cambodia's high electricity tariffs are caused by its power infrastructure, which is still dominated by isolated, inefficient generation and distribution systems powered by diesel and heavy fuel oil. With the realization of large-scale domestic power generation, the electricity grid-network will continue to evolve. It is planned that by 2015, large-scale power generation mainly from hydropower will reach 1,116 MW, all of which is to meet domestic demand estimated to grow on average 26% per annum up to 2015. An additional 1,489 km of 230 kV and 115 kV transmission lines are expected to be operational by 2015.

The expansion of power generation and high-voltage transmission network requires that medium-voltage sub-transmission and low-voltage (<0.4 kV) distribution lines be developed commensurately to transfer electricity to consumers. It is estimated that about 17,000 km of medium-voltage sub-transmission lines need to be build to connect the isolated systems throughout the country. These power sector developments will facilitate that expensive, unreliable, environmentally and health hazardous off-grid diesel generation by REEs is displaced and will partly contribute to reducing electricity costs. EAC is implementing a tariff policy that requires REEs to gradually reduce retail tariffs to at least $0.28 / kWh within two to three years upon connection to EDC's 22 kV sub-transmission backbone.

Financial capacity. A key challenge for EDC is to mobilize financing to meet investment requirements. While independent power producers are investing in power generation and construction of high-voltage transmission lines, EDC is primarily responsible for investing in the extension of medium-voltage sub-transmission lines. The cost of extending the electricity grid-infrastructure outside of provincial towns estimated at $21,000 per km is high. Coupled with low population density and low consumption, the return on investment is marginal and challenges EDC's long-term financial sustainability. EDC does not receive any budgetary support and will need to meet the investment requirements by using its own resources and mobilizing concessionary financing from development partners.

Affordability. Affordability represents a major barrier for increasing grid-electricity supply. With an average monthly household income of $98, a household will need to pay on average $70 to $120 for connecting to the grid-electricity infrastructure (including connection fee, wiring from the meter, and house wiring). The government is aiming to address this challenge and is already implementing a pilot scheme of providing lower income households with interest free loans to finance the connection to the electricity grid. The pilot scheme and its potential future scale-up are implemented by the Rural Electrification Department, a recently established department under EDC.

Human resource development. To allow EDC to efficiently and effectively keep pace with the expansion requirements, human resource capacity in the key business areas of strategic, operations, financial, information technology and human resource management, need to be strengthened, and appropriate strategies, policies, processes, and procedures need to be further updated, developed, and implemented.

Strategy and Road Map

In its National Strategic Development Plan (NSDP), 2009-2013, the government recognizes the importance of developing the energy sector to ensure socioeconomic growth and thus, reduce poverty to at least 19.5% by 2015. The government has developed a Strategy and Plan for Development of Rural Electrification in the Kingdom of Cambodia (SPDRE), 2011, to achieve 52% household electrification by 2020 and 67% of household electrification by 2030, mainly by expanding the country's grid-electricity infrastructure. EDC is primarily responsible for investing in the expansion of the country's 22 kV sub-transmission backbone network to connect the grid substation

Impact Broader access to grid electricity in Cambodia
Project Outcome
Description of Outcome Expanded supply of reliable and cost effective grid-electricity in Kampong Thom, Kampong Cham, Siem Reap, Kandal, and Banteay Meanchey
Progress Toward Outcome The financial evaluation of qualified bidders is in progress. The project implementation consultant was fielded in January 2015.
Implementation Progress
Description of Project Outputs

Component 1: Expanding the medium-voltage sub-transmission network

Component 2:

Support to EDC for implementing subprojects

Streamlined project implementation

Effective support in design and construction

Gender-balanced implementation of compensation measures

Component 3:

Improving the operational effectiveness and efficiency of EDC

Stronger operational and financial capacity

Financial accounting and enterprise public utility organization management information system rolled out

Gender-balanced human resource management and development within EDC

Status of Implementation Progress (Outputs, Activities, and Issues)

Package 1 - Financial evaluation of qualified bidders on going.

Package 2 - Scope of work for this package is being identified.

The FAUMIS contract was awarded in December 2014.

The roll-out of computers and servers was also awarded in 2014.

Geographical Location
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects The safeguard category for the project is B for environment. An initial environmental examination report with an environmental management plan and implementation budget has been prepared in accordance with ADB's Safeguard Policy Statement and will be disclosed on ADB's website. No component of any of the three appraised subprojects is located in an environmentally sensitive or protected area, and adherence to good international construction practices will mitigate any potential impacts during construction. The main impact during preconstruction will be the clearing of unexploded ordnance in the project's sub-transmission corridor, and before civil works begin, a certified unexploded ordnance clearance certificate needs to be obtained.
Involuntary Resettlement The safeguard category for the project is B for involuntary resettlement. A resettlement plan with an estimated compensation budget has been prepared in accordance with ADB's Safeguard Policy Statement and will be disclosed on ADB's website. No physical relocation will be required and, in this case, the term resettlement relates to limited acquisition of livelihood trees and crops. Potential impacts will be limited to the installation of concrete poles using about 0.2 square meters of land and the stringing of conductors requiring the trimming of some tree branches. Some trees may need to be removed in a few villages and market areas. The estimated impact of tree removal is 1 tree per 2 km, including productive trees such as mango, palm, coconut, and tamarind.
Indigenous Peoples The safeguard category for the project is C for indigenous peoples.
Stakeholder Communication, Participation, and Consultation
During Project Design Refer to the Stakeholder Communication Strategy Matrix (Section IX, para E, page 40 of the Project Administration Manual (PAM))
During Project Implementation Refer to the Stakeholder Communication Strategy Matrix (Section IX, para E, page 40 of the Project Administration Manual (PAM))
Business Opportunities
Consulting Services

C S 1A: Project Implementation Support, $3.2 m est., QCBS, 80/20, international firm, FTP

C S 2: Institutional Strengthening, $0.75 m est., QCBS, 80/20, international firm, FTP

C S 3: Accounting System Roll-Out, $1 m, SSS, international firm, contract extension

Procurement

Package 1: Supply and delivery of goods, construction and installation of 22 kV transmission lines in Kam;ong Cham, Kampong THom and Siem Reap Province, $31.53 m est., ICB

Package 2: Supply and delivery of goods, construction and installation of 22 kV transmission lines in Banteav Meanchey and Kandal, $8.2 m est., ICB

Responsible ADB Officer Rehan Kausar
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Energy Division, SERD
Executing Agencies
Electricite Du CambodgeSt 19 Watt Phnom, Daun Penh District
Phnom Penh, Cambodia
Timetable
Concept Clearance 29 Nov 2010
Fact Finding 28 Aug 2012 to 31 Aug 2012
MRM 02 Oct 2012
Approval 14 Dec 2012
Last Review Mission -
Last PDS Update 23 Mar 2015

Loan 2979-CAM

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
14 Dec 2012 17 Jan 2013 28 Oct 2013 31 Dec 2017 31 Dec 2019 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 56.29 Cumulative Contract Awards
ADB 45.00 14 Dec 2012 3.65 0.00 9%
Counterpart 11.29 Cumulative Disbursements
Cofinancing 0.00 14 Dec 2012 0.25 0.00 1%

Loan 8264-CAM

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
14 Dec 2012 08 Mar 2013 29 Oct 2013 31 Dec 2017 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 10.00 Cumulative Contract Awards
ADB 0.00 14 Dec 2012 0.00 0.00 0%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 10.00 14 Dec 2012 0.00 0.00 0%

Evaluation Documents

See also: Independent Evaluation

No documents found.


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