Document Sample
					         Kingdom of Cambodia

Ministry of Industry, Mines and Energy



       BONN, GERMANY, JUNE 2004
                                     in Cambodia

        First of all, I am very pleased to inform you that in contribution to the Clean
Development Mechanism, the Royal Government of Cambodia has formulated a National
Energy Sector Policy, in October 1994, to provide an adequate supply of energy
throughout Cambodia at reasonable and affordable price, ensure a reliable, to secure
electricity supply which facilitate investment in Cambodia and development of the
national economy, to encourage exploration and environmentally and socially acceptable
development of energy resources, and to encourage efficient use of energy and to
minimize detrimental environmental effects from energy supply and use.
        The Royal Government of Cambodia in its pursuit to reduce poverty, improve the
standard of living and foster economic development especially in the rural areas, takes
cognizance of the need to meet the basic infrastructure requirements and to create access
to reliable electricity services at an affordable cost as an integral part of the governmental
agenda of economic development and social upliftment of its marginalized rural people.
Nearly 85% of the Cambodian population still lives in the rural areas, and only 13% of
the rural households have access to grid-quality electricity.
        Substantial hydropower resources, oil, gas and coal deposits and other renewable
energy sources such as biomass, solar and mini-hydro are available in Cambodia. The
hydro potential of the country about 10,000 MW could therefore play a very important
role in the long-term energy development and the strategic planning, not only the large
but also the mini and micro-hydro The presence of coal in Kampot Kampong Thom,
Kratie, Stung Treng and Battambang provinces indicated the reserve around 7 million
tons. The reserves of crude oil and natural gas were estimated at about 50 to 100 million
barrels and 1,500 to 3,500 ft3 respectively, but the wells with commercial scale have not
been found, especially Woodside had explored recoverable gas reserves of 2.7 TCF
which can serve the plant with gas consumption of 10 BCF / year in more than 55 years.
It needs technical and financial support for data collection, feasibility studies and the
promotion of these natural resources to reduce the use of imported fossil fuel, to preserve
the environment and to cope with the growing energy demand and for possible energy
export in the region. So the diversification of the energy sources of supply is adequate.

The key action plans selected for future supply are the following:
       - Construction of National Grid as base for competition and regional
       interconnection, firstly with neighboring countries
       - Oil, gas or coal based thermal generation in the coastal areas, especially TGCC
       in Sihanoukville connected to Kampot
       - Development of transmission line linking Phnom Penh to Viet Nam, through
       Takeo and the transmission line form Takeo to Kampot provinces financed by the
       grant from KfW
       - Development of transmission line linking Thailand system to 3 provinces:
       Battambang, Banteay Meanchey, Siem Reap
       - Development of transmission line linking Battambang to Phnom Penh through
       Pursat and Kampong Chhnang
       - Trade of electricity from Viet Nam and Thailand
       - Hydropower generation in the west and north-east for self-sufficient and export
       - Off-grid rural electrification by distributed generation and renewable energy

        This action plan puts emphasis on hydropower, transmission, internal and
international interconnection, distributed generation, rural electrification by renewable
energy as well as on optimal efficiency in generation and use of energy.

        Johannesburg World Summit on sustainable development in August 2002
provides an open and flexible framework to enhance the awareness and knowledge of
renewable energy and energy efficiency policies and measures to strengthen
stakeholders’ capacity to meet the sustainable energy objectives as vital prerequisite for
alleviating poverty and promoting development. An increased use of renewable offers a
win-win-solution in meeting the challenges and sustaining economic development less
dependent on fossil fuel imports and fuel price volatility, avoiding air pollution problems,
        These projects are likely to be smaller and will seek to provide energy to
dispersed populations. To implement such programs, the engagement of private sector is
necessary generating needs for technical assistance and financial support. The general
perception is that renewable energy projects involve high costs and that returns are
modest with long-term paybacks. The funds would be available on a loan basis and grant
basis for initial subsidies. There is a need to strengthen capacity and institutional
framework, to overcome market failures and financing barriers.

       1- On-grid connection and Energy efficiency

        The lack of good energy infrastructure in the rural areas as a result of resource
and capacity constraints is seriously impeding efforts to fight poverty and implement
development programs. The government has long-term perspectives on energy as its
overall economic planning accordingly with national socio-economic opportunities,
energy resources availability and finance, and energy efficiency. The strategy and ten
year program for rural electrification will incorporate the grid extension, cross-border
medium voltage transmission from Vietnam, Thailand and Lao, rehabilitation of existing
isolated grid systems in provincial towns, creation of new distributed generation. The
most realist and optimistic scenario consists of large-scale thermal generation in coastal
areas, interconnection with Thailand and Viet Nam including the connection Phnom
Penh-Battambang. The first National Grid by year 2016 will covers mainly the southern
and, to a smaller extent, the north western region that still leaves out a large part of the

   2- Renewable Energy Resource Development

     About 85% of the total population lives in the rural areas, the government of
Cambodia has recognized and placed great emphasis on the development of local energy
resources especially renewable energy by the use of Renewable Energy Technologies
(RETs) including solar, wind, mini hydro and biomass for the overall integrated rural
development and to reduce poverty and raise the living standard of the rural population in
the off-grid areas, through the increased access to reliable, clean, safe efficient and cost
effective electric services. This requires important human and huge financial resources
The RGC calls the International Community for technical assistance and financial
support for the promotion of clean electricity in rural areas.

        The primary objective is realized through the following sub-objectives:
        i) Widely expand the access for electricity services to the rural population
through development of appropriate programs and action plans to promote renewable
energy technologies (RETs);
        ii) Expand the supply base for renewable energy services by motivating and
promoting the participation of private entrepreneurs so as to provide efficient and cost-
effective services, which will benefit the whole community;
        iii) Facilitate systematic market and institutional development in renewable
electricity sector by creating a comprehensive legal and regulatory framework to enable
effective participation of government, private and community based entities in providing
electricity services to the rural consumers;
        iv) Ensure a wide and equitable access of electricity services to all sections of the
rural population by developing appropriate tariff policies and instituting a rational tariff
        v) Promote environmentally sustainable small power technologies including RETs
in on-grid and/or off-grid mode in order to create wide access for rural consumers to
affordable electricity services; and
        vi) Contribute to empowerment of the rural poor by creating economic
opportunities and uplifting standards of living through electricity services, and through
involving them in planning, operation, maintenance and management of programs
providing those services.

        The strategy target is to provide to 70 % of the rural population by the year 2030
with access to grid-quality electricity services at an affordable cost to ensure the
increased social welfare, education, health and economic uplift through income
generation activities. The Ministry of Industry, Mines and Energy with the assistance
from the World Bank has prepared the policy, strategy and Renewable Electricity Action
Plan, with various form of incentives, such as subsidies, tax duty exemption on imported
capital equipment, income holiday etc… to attract awareness of the people, more donor
assistances, and to create favorable environment for market development and private

       REAP five guiding principles:
       - Renewable energy technologies will be used when economically least cost
       - The RGC will serve the role of market enabler
       - Private sector firms will serve as market developers and suppliers
       - Decision on renewable electricity development for the needs of the poor
       - Subsidies will be used carefully
       REAP long-term targets:
       - 5% of all energy, about 6MW, will be supplied by renewable electricity
         technologies and delivered to rural households or businesses.
       - 100,000 households will receive electricity from renewable electricity
       - 10,000 households will be served by solar photovoltaic.
       - A sustainable market for renewable electricity system should be developed.

        To achieve these targets, the action plans would be implemented through:
        a- Mini grids supplied by private diesel generators ranging from 350W to
1000kW, by hydro generation: mini hydro 500kW to 5MW, micro hydro 300 to 500kW,
pico hydro up to 3kW, generally run-of-river or a combination of the both.
        b. Solar energy the average sunshine duration of 6-9 hours per day given in
average of 5 KWh/m2/day, thus, considerable potential of solar energy. The application
of Photovoltaic systems with total installed capacity of around 130 kW is a recent
development in Cambodia, as pilot program for health and rehabilitation centers, and
Solar Home Systems demonstration units. Photo-voltaic Systems for lighting, pumping,
television, telecommunications, office equipment: with capacity of 12 Wp, charge
controller 5.6A, DC lamp at 12V/0.9A, lead-acid battery systems (from 35 to 70 Ah),
wind power: in the range 5 to 10 kW.
        c- Wind Energy
        The southern of the great lake Tonle Sap, the mountainous districts in the
southwest and the coastal regions such as Sihanoukville have the annual average wind
speed of 5m/s or greater; thus the introduction of wind power generation system in these
areas is promising. However, the annually average wind speed in some areas is very low,
3m/s or below, so the windmill generation of electricity could be realized, such as
mechanical wind pumps. The hybrid generation system with a base operating system of
diesel, micro-hydro or solar is ideal. In selecting promising regions for wind power
generation, it is important to have weather data regarding area wind conditions, so it
needs the necessary devices for weather observations and evaluations and the
technologies transfers.

   3- Cogeneration

        Policy is to gradually opening up the use of biomass technologies for power
generation using economically and environmentally attractive cogeneration system or
Combined Heat and Power (CHP) which are proven to bring the cost of energy
generation to competitive levels and quality of energy to meet the demand of the end
users, and ensuring the environmental and energy saving potentials. Through the EC-
ASEAN Energy Facility EAEF, for the transfer and demonstration of proven European
technologies based on biomass cogeneration which bring the competitive cost in
agricultural enterprises and ensure the increased commercial application, and will
contribute positively to the supply, utilization and environmental objectives of energy
sector. Decentralized renewable energy and cogeneration have the potential to contribute
in rural electrification, and is an important prerequisite for development and prosperity,
and at the same time to minimize the greenhouse gas emissions and to answer to climate

       4- Environmental Policy

        Energy is a crucial input into the development process. However, the current
system is not sustainable, in particular because of the negative effects of burning fossil
fuels on the well-being of humans and eco-systems. The dependency on fossil fuels must
be reduced gradually and to enhance safety and maintain clean and healthy the
environment. To achieve the harmonization of the Economic growth, the Energy security
and the Environmental protection, the diversification by the best mix of primary energy
and the rational use of energy are very important contribution in the reduction of
greenhouse gas emission through Kyoto Protocol.
        Cambodia had ratified UNCCC on the 18th December 1995; and signed the
Instrument of Accession to the Kyoto Protocol on July 2002. For this purpose, the
Environment Protection and Natural Resource Management Law 1996 provide for all
power projects to be subject to Environmental Impact Assessment (EIA) procedures. An
Environmental Steering Committee and EIA Project Review Teams (PRTs) was
established for protection against pollution of air, soil and water, protection against
noises, vibration and radiation, protection of flora and fauna. Under PREGA (Project on
Renewable Energy, Energy Efficiency and greenhouse gas abatement, to promote
investment switching to renewable energy, proper and renewable, avoids many harms
and pollutions: gas emission, ashes production, wastes stocking; only the impacts on
landscapes, birds, natural environments.
        Following the Government Energy sector development policy, Cambodia has
made efforts in implementing the sustainable energy efficiency program with the goal to
meet the domestic energy needs, ensuring the clean development through CDM
obligations, which needs the international assistance, especially the support from Japan
and GEF, especially to build capacity and facilitate dealing with the climate change, and
to get better understanding of greenhouse gas and effective response measures, to prevent
dangerous interferences with the climate system.
        Johannesburg Renewable Energy Coalition was launched with wide support in
September 2002. Cambodia have been in a positive attitude towards the coalition, and
acknowledged it as an important instrument to formulate the government’s vision and
integrated policies and strategies, preparing environments enabling renewable energy
markets and for attracting the investments to increase the share of renewable energy. We
hope that the outcome of the World Summit on Sustainable Development will be a good
basis for the international cooperation and agreement in the area of renewable energy to
reduce pollution, diversify and secure energy supply and help provide access to energy in
support of poverty eradication, particularly in the rural areas, through improving
agricultural productivity and creating off-farm employment and income generation
opportunities, and improving education and health.
       5- Private Participation Policy

        Because of the huge growth in power supply, the infrastructure requirements were
not affordable and the government decided to create conditions to encourage private
participation in transparent competition, with the best incentives in power sector. The
situation in Cambodia has been significantly improved; laws have been promulgated and
prepared in many fields especially in investment. So, major positives signals have been
observed such as the award of MFN to Cambodia and its membership in ASEAN and
        The government following the principle of free enterprise and market economy
system has made significant step in institutional strengthening and good governance.
Investment in Cambodia is a direct and open process. The mode of participation of
private investors through international competitive and transparent bidding for significant
projects follows the new approach for the development and approval of private
investment projects in a transparent manner. The “Investment Law 1994” gives
incentives for the benefits of investors.
        The Public Private Infrastructure Advisory Facility, a multi-donor technical
assistance managed by World Bank, assisted to improve the quality of infrastructure
through private sector participation in energy sector, based on transparent competition. A
Sub-decree have been drafted for this purpose, to clarify the rules for private
participation, the roles and responsibilities of public sector, and to establish a transparent
and efficient procurement process.
          There is a clear opportunity for the private sector to provide decentralized, cost
effective and reliable energy services in a wide variety of innovative and entrepreneurial
ways: to improve the efficiency of the electricity supply, to create transparent and predictable
environment for investors participation, and to create a fair balance of interest of the
producers and consumers.
          The generation segment of the power sector is attractive to the private sector,
provided that the risks and rewards are reasonable. In exchange, it is able to introduce
substantial efficiency improvements and capture of economies of scale.

       6- Stakeholders Involvement
        The Royal Government has made effort in introducing the concept, in building
capacity and establishing the management framework to encourage stakeholder
participation in implementation of agreed actions. Successful implementation of the
strategy will be determined by the degree to which all part of the society adopt its vision
and principles and contribute to achieving its goals. The energy policy is developed in
close cooperation with stakeholders other than different ministries and private sector,
especially in hydropower development which could be paid through international
financial institutions; stakeholders’ involvement is a condition for appropriation of funds.
It is important:
        - To identify stakeholders, it may include the following organizations:
government departments, energy industry, energy users, local governments, scientific
community, and civil society organizations. And to strategize stakeholder involvement:
clear view on the role responsibility and possibilities of each stakeholder.
       - To disseminate information that can generate public support and to implement
transparent processes for the involvement.
        - To monitor and review the strategic energy management and planning by
stakeholder involvement. So the establishment of a clear target and quantitative goal is a
key feature for monitoring progress in implementation, reviewing and resetting objectives
and targets.
       - To develop option for mutual gain through win-win solution.

       7- Conclusion
        The electric sector is in important stage of development. As already outlined, it
presently provides only very limited services, and per capita consumption in Cambodia is
the lowest in the region. The sector should be developed rapidly to contribute to a
balanced and sustainable growth. Cambodia’s main strategic requirement is to identify
alternative resources of energy, at a reasonable price.
        The main problem is that the economy of scale necessary to deliver least cost
energy are as longer as Cambodia’s level of consumption be increased, but investment in
large scale power station both thermal and hydro could be considered for energy export
oriented that will contribute the least cost for domestic uses.
        In summary, to reach profitability, efficiency, innovation and social objectives,
commitment and flexibility is necessary, and private participation is inevitable. The least
cost supplier will win the market and will gain the profit; the national economy as a
whole will grow rapidly.
The structural reform, good governance and efficient sharing of responsibility are the
determinant keys of successes:
           -   The government plays the role in formulating and implementing policy,
               strategy, plan of action, guidelines and rules.
           -   EAC plays the role of regulator in licensing, setting prices, formulating
               guideline for good governance and transparent procedures, increasing
           -   Strengthening the state-owned companies to be the benchmark, active
               partner and competitor with private sector, and mainly to avoid
               monopolistic tariffs.

       The main strategy is to provide the strong legal framework, the right incentives
and the perfect competition for better performance.
                                                               wind sp eed

     C     CRC Solutions Corp.

     Table Capacity PV and Wind installed and Installation Planing
                            in provinces

No    Province                  PV           PV              WIND
                             1998-2001      2002-2003       2002-2003

 1   Kampong Cham             1,725 W      3,210 W
 2   Kampong Chhnang            150 W      1,080              400 W
 3   Pursat                   1,590 W
 4   Siem Reap                   805 W
 5   Preah Vihear             1,876 W
 6   Otdor Mean Chey            800 W
 7   Banteay Mean Chey          110 W
 8   Krong Pallin               150 W
 9   Kampong Speu             1,495 W
10   Kandal                  18,380 W       3,500 W
11   Takeo                    1,440 W       1,180 W          2,400 W
12   Kampot                    350 W         200 W
13   Krong Kep                 150 W
14   Sihanouk Ville             550 W
15   Svay Rieng                435 W
16   Rattanakiri                450 W
17   Kratie                    680 W
18   Radio Repeater         100,000 W -      -

       Grand Total           130,456 W       9,858 W        2,800 W
       n Ú a e l n Grid
     b ½ aTransmission K 2016-2018
         b n
     RB §B¢CtiB Ga t 2016-2018
                                                                                                                BAN SOK
                                                                                                                        LOWER SESAN III 375       UPPER SESAN IV

                                                                        PREAH VIHEAR
                                                                                                                       LOWER SESANII 207
                                                                                              STUNG STRENG
      BANTEY MEAN CHEY                                                                                                                        RATNAKIRI
                                               .                                               LOWER SESAN I

                                                                                             STUNG TRENG               LOWER SRE POK II 222
                                               SIEM REAP                                                                             LOWER SRE POK III 330

                                                                                                                                           LOWER SREPOK IV 235


                                                                       KOMPONG THOM                            SAMBOR 467

              BATTAMBANG II 36

          STUNG ATAY 110                              KOMPONG CHHNANG

                                  UPPER,MIDDLE AND LOVER
                                  STUNG RUSSEI CHRUM 302
                                                                                                KOMPONG CHAM

                               STUNG TATAY
                LOWER STUNG
                RUSSEI CHRUM                 STUNG CHAY ARENG 125
                                                                                                                                              TA DINH
                  KOH KONG                                                      PHNOM PENH
                                                                                         PREY VENG
                                     KIRIROM PLATEAU                                                                                               LEGEND
                                                              KOMPONG SPEU
                                      ( KIRIROM III 13 )
                                             Koh Kong
                                                                                              SVAY RIENG
                                              KIRIROM I 12              TAKEO                                                                  HYDROPOWER PROJECT

                                                        KAMCHAY 127                                                                            PROVINCIAL CITY

                                                                                                                                               CAPITAL , TOWN
                                                   PLATEAU                                                                                    TRANSMISSION LINE 115kV

                                                             KAMPOT                                                                           TRANSMISSION LINE 220kV
                           SIHANOUK VILL