Cambodia: Grid Reinforcement Project

Sovereign (Public) Project | 53324-001

The project is aligned with the following impact: adequate and reliable power supply from environmentally sustainable energy sources ensured. The project will have the following outcome: transmission network capacity and stability improved.

Output 1: 115-kilovolt and 230-kilovolt grid infrastructure expanded and reinforced. The project will support the construction of four 115 kV-230 kV overhead and underground transmission lines and 10 substations in Phnom Penh, Kampong Chhnang, Kampong Cham, and Takeo provinces. It will add 13 circuit-kilometers of 230 kV transmission lines; 36.7 circuit-kilometers of 115 kV transmission lines; 1,475 megavolt-amperes of 230 kV-115 kV-22 kV substation transformer capacity; and 350 megavolt-amperes of 115 kV-22 kV substation transformer capacity.

Project Details

Project Name Grid Reinforcement Project
Project Number 53324-001
Country Cambodia
Project Status Active
Project Type / Modality of Assistance Grant
Loan
Source of Funding / Amount
Grant 0736-CAM: Grid Reinforcement Project
Strategic Climate Fund - SREP US$ 4.70 million
Grant 0737-CAM: Grid Reinforcement Project
Clean Energy Fund under the Clean Energy Financing Partnership Facility US$ 2.00 million
Loan 3967-CAM: Grid Reinforcement Project
concessional ordinary capital resources lending / Asian Development Fund US$ 127.80 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector

Energy / Electricity transmission and distribution - Energy efficiency and conservation

Gender Equity and Mainstreaming Some gender elements
Description

The project is aligned with the following impact: adequate and reliable power supply from environmentally sustainable energy sources ensured. The project will have the following outcome: transmission network capacity and stability improved.

Output 1: 115-kilovolt and 230-kilovolt grid infrastructure expanded and reinforced. The project will support the construction of four 115 kV-230 kV overhead and underground transmission lines and 10 substations in Phnom Penh, Kampong Chhnang, Kampong Cham, and Takeo provinces. It will add 13 circuit-kilometers of 230 kV transmission lines; 36.7 circuit-kilometers of 115 kV transmission lines; 1,475 megavolt-amperes of 230 kV-115 kV-22 kV substation transformer capacity; and 350 megavolt-amperes of 115 kV-22 kV substation transformer capacity.

Output 2: First utility-scale energy storage system provided. The project will support EDC in designing, procuring, and operating the first utility-scale BESS in Cambodia, capable of storing 16 megawatt-hours, and in analyzing its performance. This is a desirable size to support multiple applications - a standard feature of BESS installations - such as (i) smoothing output at 80% from the phase 1, 60-megawatt (MW) ADB solar park in Kampong Chhnang Province; (ii) providing 0.5 hours of curtailment reserve to address daily power outages; (iii) providing primary frequency control; and (iv) providing congestion relief, which allows to defer upgrades in transformer capacity at Grid Substation 6 (a substation near the ADB solar park site).

Project implementation consultants will complement EDC staff to ensure a high degree of project management efficiency and provide on-the-job training to strengthen transparency and accountability. In addition, EDC will undertake activities that (i) promote inclusion and gender equality in the workplace, (ii) dismantle gender-based stereotypes related to women's participation in energy sector activities and employment, and (iii) inform communities about the safe use of electricity.

Project Rationale and Linkage to Country/Regional Strategy

Cambodia has achieved sustained economic progress. Cambodia's per capita gross national income grew on average by 7.1% per annum from $950 in 2013 to $1,390 in 2018. Strong economic growth was driven mainly by urban-based industries such as garment exports and tourism, and, more recently, construction and real estate.

However, COVID-19 pandemic threatens to undermine progress. Whereas Cambodia's economy was projected to grow by 6.8% before the coronavirus disease (COVID-19) pandemic, it is now expected to contract by 5.5% in 2020. It risks pushing an additional 1.3 million people into poverty. The government is implementing an assistance program to mitigate the adverse social and economic impacts. Moreover, financing and constructing needed infrastructure, including those that enables the provision of reliable and sustainable electricity supply, is important to create employment and support the country's post COVID-19 economic recovery. Cambodia aspires to attain middle-income status by 2030.

Government prioritizes energy sector development. In its Socio-Economic Policy Agenda, 2018-2023, the government recognizes the importance of developing the energy sector to increase competitiveness, ensure sustained economic growth, and thereby continue to reduce poverty. Its key policy objectives call for (i) extending the coverage of power supply, (ii) stepping up power reliability by expanding and upgrading the transmission network infrastructure, (iii) further lowering systemwide costs to enable a tariff reduction, and (iv) providing access to electricity from 74.8% in 2019 to 95% of all households by 2030.

More robust electricity supply will enhance economic productivity. Electricity supply increased on average 19.1% annually from 2,515 gigawatt-hours (GWh) in 2010 to 12,015 GWh in 2019. Large investments in power generation help address rapidly growing demand for electricity that propels economic growth. Most (86.5%) of electricity is generated domestically from hydro (50.2%), coal (32.3%), renewable energy (0.7%), and diesel fuel (3.3%). In 2019, 98.5% of power generated domestically was provided by independent power producers. Power imports from neighboring countries contributed 13.5% to electricity supply.

However, electricity services are still unreliable with poor quality. One major pressing concern is that the existing transmission infrastructure is reaching capacity. At the end of 2019, Cambodia's transmission infrastructure consisted of 2,267 kilometers (km) of 115 kV and 230 kV transmission lines and 36 substations. Several substations serving the provinces of Phnom Penh, Kampong Chhnang, Kampong Cham, and Takeo are overloaded, resulting in transmission constraints and disproportionate transmission losses (2.3%). A large number of households still do not have access to electricity in Kampong Chhnang (32.3%), Kampong Cham (13.3%), and Takeo (9.2%) provinces, and those with access face frequent and unpredictable power shortages averaging 2 hours per day. It severely hampers the quality of life, erodes Cambodia's competitiveness and effort to diversify into a manufacturing destination. Both domestic firms and foreign investors name inadequate electricity supply, in addition to its high cost, as a main constraint to doing business in Cambodia.

Transmission infrastructure investment requirement of $2.27 billion. EDC, a wholly state-owned limited liability company, is responsible for electricity supply, transmission, and distribution. It does not receive budgetary support from the government and finances power purchases and transmission infrastructure costs from its operational cash flow. Private domestic and foreign investors are encouraged to invest. Several have already done so and operate 41.7% of the total length of 115 kV-230 kV transmission lines (945 km) as well as 10 associated substations (27% of operational substations) under build-own-operate-transfer arrangements of 10 years or more. In addition, Cambodia's rural electricity enterprises represent an important private-sector-based framework for developing, operating, and maintaining the country's distribution network. However, the estimated transmission investment requirement of $2.27 billion exceeds the financing available from any one partner. Concessional financing from development partners is therefore a critical supplement to EDC and private financing, and essential for accelerating the development of power infrastructure that can advance economic growth and poverty alleviation in Cambodia.

Project's role as an important economic and post-COVID-19 enabler. The reinforcement of EDC's infrastructure will enable reliable electricity transmission and thereby enhance economic productivity, competitiveness, and diversification. Also, the construction of four transmission lines and 10 substations under the project will create direct employment for 1,300 people over a period of 2 years, with nearly 27% of the jobs to be created accessible to unskilled workers. Because of the economywide spillover effects, the volume of indirectly generated employment is likely to be much larger. Direct and indirect jobs created in backward supply chain industries will add to household income, which will increase spending and in turn generate more jobs in other sectors. In parallel, however, the energy sector needs to become more inclusive. Gender-based stereotypes related to women's participation in sector activities and employment prevail. Women account for 17% of the 5,584 people employed by EDC and work mainly in accounting, finance, billing, and public relations. Only a few women hold senior and management positions. The project will focus on education and training activities to strengthen inclusion and gender equality at EDC.

Improvements in sector planning and efficiency. Substantial increases in transmission investment can cause small tariff increases, unless they are wholly offset by savings from low-cost generation, fewer transmission and distribution losses, and congestion cost control. EDC and the Ministry of Mines and Energy (MME) are making progress in strengthening sector development planning with direct support from ADB. This includes technical assistance (TA) for project readiness, procurement, and financial management to improve probity, efficiency, and adequate service delivery, and avoid excessive costs. Concessional financing from development partners will also help minimize the impact of the substantial transmission investments on end-user tariffs.

Introducing the battery energy storage system. As costs fall, BESS are likely to become a valuable asset because it (i) can enable EDC to adapt to uncertain electricity demand and reduce the risk of overbuilding and overinvesting in power generation, (ii) is more modular and can be moved more easily than power plants, and (iii) helps integrate intermittent renewable power generation capacity and can thus contribute to achieving Cambodia's target of a 16% reduction in energy greenhouse gas emissions by 2030 from 2010 level. EDC and Cambodia's electricity regulator, Electricity Authority of Cambodia, must start now to understand how the large-scale deployment of low-cost battery energy storage can be used to (i) plan and operate Cambodia's future grid and (ii) reduce systemwide costs. A pilot project located at the ADB supported 100 MW National Solar Park and coupled with on-the-job training is ideal for understanding the performance of an emerging technology such as the BESS, and for assessing different business models.

Impact

Adequate and reliable power supply from environmentally sustainable energy sources ensured

(Rectangular Strategy for Employment, Equity and Efficiency, Phase, IV: Building the Foundation toward Realizing the Cambodia Vision 2050)

Project Outcome
Description of Outcome Transmission network capacity and stability improved
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

115 kV and 230 kV grid infrastructure expanded and reinforced

First utility-scale energy storage system provided

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Nation-wide, Phnom Penh, Sihanoukville
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects The project is confirmed as environment category B in accordance with ADB SPS 2009. The identified impacts are site-specific and can be reduced to an acceptable level through effective implementation of mitigation measures. No protected areas, significant migratory bird species and flyways or other particularly sensitive environmental receptors have been identified in the project areas of influence.
Involuntary Resettlement The project is confirmed as category B for involuntary resettlement in accordance with ADB SPS 2009. Based on basic design and consultations, the project is expected to have land acquisition impacts that are not considered significant. No physical relocation is expected from the implementation of the subprojects and the project as a whole. The project is not expected to acquire any land from customary landowners. No long-term impacts are expected as the construction and operation will not restrict the community from accessing and using nearby resources. Adverse impacts such as trimming or loss of trees or crops being farmed on the land, or exposure to potential health hazards because of the entry of non-community workers, are likely to be minor and temporary.
Indigenous Peoples Based on the social impact assessment conducted as part of due diligence for all the subprojects, the project is assigned category C for indigenous peoples impact as it does not directly or indirectly affects the dignity, human rights, livelihood systems, or culture of Indigenous Peoples, neither it affects the territories, natural or cultural resources they own, use, occupy or claim as their ancestral domain.
Stakeholder Communication, Participation, and Consultation
During Project Design Public consultation and information disclosure were initiated during the project preparation stage.
During Project Implementation

Public consultation and information disclosure which were initiated during the project preparation stage, will be carried out on an ongoing basis throughout project implementation.

EDC shall: (i) ensure timely disclosure of relevant and adequate information that is understandable and readily accessible to the affected persons and other stakeholders; (ii) conduct public meetings, focus group discussions and individual one-on-one consultation if needed, in an atmosphere free of intimidation or coercion, that is gender inclusive and responsive and tailored to the needs of disadvantaged and vulnerable groups; (iii) ensure incorporation of all relevant views of affected persons and other stakeholders into project design making process, such as project design, mitigation measures, the sharing of development benefits and opportunities and implementation issues; (iv) ensure that the project displaced persons are informed about: (a) resettlement impacts, asset valuation, entitlements, compensation and payment modalities with timelines, (b) rehabilitation and income restoration measures as budgeted in the LARP, and (c) grievance redress mechanism, procedures and timelines for redress of grievances; and (v) ensure liaison is maintained with affected persons and communities for continued consultation during project implementation to identify and address safeguards issues that may arise such as related to land acquisition, environment and civil works.

Business Opportunities
Consulting Services A Project Implementation Consulting Firm will be engaged under advance contracting through Quality and Cost-Based Selection with 80:20 ratio, in accordance with ADB Procurement Policy (2017, as amended from time to time) and Procurement Regulations for ADB Borrowers (2017, as amended from time to time).
Procurement Open competitive bidding procedures will be used for (i) EPC contracts for transmission lines and substations and (ii) EPC (O&M) contract for battery energy storage system in accordance with ADB Procurement Policy (2017, as amended from time to time) and Procurement Regulations for ADB Borrowers (2017, as amended from time to time).
Responsible ADB Officer Elzinga, David C.
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Energy Division, SERD
Executing Agencies
Electricite Du Cambodge
Dr. Ty Norin
St 19 Watt Phnom, Daun Penh District
Phnom Penh, Cambodia
Timetable
Concept Clearance 23 Oct 2019
Fact Finding 17 Mar 2020 to 19 Mar 2020
MRM 02 Jun 2020
Approval 10 Sep 2020
Last Review Mission -
Last PDS Update 10 Sep 2020

Grant 0736-CAM

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
10 Sep 2020 12 Oct 2020 27 Jan 2021 31 Dec 2025 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 63.85 Cumulative Contract Awards
ADB 0.00 07 Sep 2021 0.00 0.00 0%
Counterpart 59.15 Cumulative Disbursements
Cofinancing 4.70 07 Sep 2021 0.00 0.00 0%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Unsatisfactory Partly satisfactory Unsatisfactory - Unsatisfactory

Grant 0737-CAM

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
10 Sep 2020 12 Oct 2020 27 Jan 2021 31 Dec 2025 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 2.00 Cumulative Contract Awards
ADB 0.00 07 Sep 2021 0.00 0.00 0%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 2.00 07 Sep 2021 0.00 0.00 0%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Unsatisfactory Partly satisfactory Unsatisfactory - Unsatisfactory

Loan 3967-CAM

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
10 Sep 2020 12 Oct 2020 27 Jan 2021 31 Dec 2025 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 127.80 Cumulative Contract Awards
ADB 127.80 07 Sep 2021 0.00 0.00 0%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 07 Sep 2021 0.00 0.00 0%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Unsatisfactory Partly satisfactory Unsatisfactory - Unsatisfactory

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

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Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.


Evaluation Documents See also: Independent Evaluation

None currently available.


Related Publications

None currently available.


The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.

Tenders

Tender Title Type Status Posting Date Deadline
53324-CAM: Grid Reinforcement Project Advance Notice Active 21 Aug 2020
Project Implementation Consultants Firm - Consulting Closed 03 Aug 2020 23 Sep 2020

Contracts Awarded

No contracts awarded for this project were found


Procurement Plan

Title Document Type Document Date
Grid Reinforcement Project: Procurement Plan Procurement Plans Aug 2021