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339 Chapter 16 Energy Sector 16.1. Overview The provision of energy is a major dimension in development; it is a household necessity in a modern society and is a production factor the cost of which directly affects the competitiveness of a range of goods and services where it is a direct or indirect input. The energy potential of Cambodia is still not fully known. A thorough exploration and mapping of the geographical distribution of all available sources of energy is needed for Cambodia to enable a more systematic development of the energy sector. The availability of reasonably priced power is a key ingredient of rural development, particularly in such activities as irrigation, processing of agricultural products, and SME development. The high cost of rural electricity is an important reason for the slow development of the Cambodian rural economy. 16.1.1. Power Sector Strategy Cambodian's Power Sector Strategy (2001-2005) sets out the priorities and a major investment program to lower tariffs and bring reliable electricity supplies to considerably more Cambodians. The investment program includes: (1) the development of a generation and transmission grid to link large electricity generation units to Phnom Penh and the provincial capitals; (2) rehabilitation of distribution systems in provincial towns; and (3) the development and implementation of rural electrification plan. Rehabilitation and expansion of Phnom Penh's electricity supply system is being continued. Generation capacity is also being expanded with an interconnection from Viet Nam and over the next five years from a new thermal plant in the coastal area. These improvements will enable a more reliable and secure electricity supply to the regions outside of Phnom Penh, which will help deconcentrate the development of industry. The program to establish the National Generation and Transmission Grid commenced in 2000. The first stage of this program is the construction of transmission line between Viet Nam and Phnom Penh through Takeo Province. The second stage is the construction of transmission line from Sihanoukville to Kampot province. It will allow generating units to be established in the coastal area to provide supplies to provincial cities between Sihanoukville and Phnom Penh and also increase the capacity available to Phnom Penh. By establishing generation capacity in the coastal area, it will lessen the need to transport fuel 340 on the Mekong reducing the danger of oil spills and environmental damage. The portion of transmission line from Phnom Penh to border of Viet Nam through Takeo will be established first to enable electricity import from Viet Nam. The 220 kV interconnection from Viet Nam will supply power to communities in the south and increase capacity available to Phnom Penh. The strategy for development of the energy sector envisages the following priorities: (i) production capacity expansion (promotion of motivation to invest in electricity production); (ii) development of energy infrastructure and services through private sector involvement; (iii) funding development activities in the energy sector; (iv) diversifying energy sources; (v) improving and securing access of population to domestic fuels; and (vi) strengthening rural electrification. 16.1.2. Rural Electrification A five-year rural electrification program including renewable energy is also being implemented. The total cost of the first portion of power transmission and rural electrification project is estimated at US$89 million. Another 115 kV interconnection transmission line was also established to connect Thailand to Banteay Meanchey, Battambang and Siem Reap provinces to support the Provincial and Rural Electricity Program. The plans also include developing a hydropower project initially in Kamchay and thereafter in Stung Battambang, Stung Atay and Russey Chrum. Consideration of hydroelectric stations in Cambodian will require achieving the necessary balance between growth, environmental and social equity objectives. Efforts should be made to avoid the mistakes of neighbouring countries, where the development of hydropower has led to environmental, social and economic problems. Rural electrification should be geared to maximize rural employment creation and generate higher incomes for the poor. RGC set up in 2004, with the support of the World Bank, the Rural Electrification Fund (REF) with the objective of making available access to electricity at a reasonable price to the rural population for economic, social, and domestic consumption. The REF is funded through grants, subsidies, and borrowings. “Smart subsidy” mechanisms envisaged under the REF will encourage entrepreneurs to invest in the production and distribution of rural electricity, in particular in renewable energy projects. 16.2. Electricity Production The production and distribution of electricity are assured by Électricité du Cambodge (EDC), an SOE established in 1992. In March 1996, EDC...

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