World Bank Approves US$33.5 Million for Cheaper and More Reliable Electricity for Mekong’s Poor

Communiqué de presse n°:2007/420/EAP

Contacts:

In Phnom Penh: Saroeun Bou (855) 23-217-301,sbou@worldbank.org
In Vientiane: Viengsamay Srithirath (856) 21-414 209,vsrithirath@worldbank.org
In Washington: Elisabeth Mealey (202) 458-4475,emealey@worldbank.org

WASHINGTON, June 5, 2007¾– People living in Cambodia ’s poorest provinces, who currently pay among the highest tariffs for electricity in the world, will see their power bills drop dramatically as a result of grants approved today by the International Development Association (IDA).

Under the World Bank’s Greater Mekong Sub-region (GMS) Power Trade Program, a grant of US$18.5 million to the Kingdom of Cambodia will be used to construct cross-border transmission lines to neighboring Lao PDR and Vietnam. Along with transmission links under construction with Vietnam through the IDA-funded Rural Electrification Project, the new funding will further expand power trade with Vietnam, enabling Cambodia to import electricity and bring down the cost for poor consumers.

Another US$15 million grant to Lao PDR will support the construction of lines to export power to Cambodia and build a transmission system that links Lao PDR, Cambodia and Thailand. This will help improve the supply of electricity to Saravan Province in the south of Lao PDR.

Ian Porter, the World Bank Country Director for Cambodia and Lao PDR said the Strategy for World Bank Regional Support to the GMS – of which the power trade program is one part – seeks to strengthen regional cooperation and integration so that the Greater Mekong Sub-region can benefit from the development of South-East Asia ’s natural resources and rapidly growing economies. Other elements of the strategy include water resource management, trade and transport facilitation, and labor migration.

“For the people of the Mekong region to benefit, they will need strong institutions, good policies and reliable infrastructure,” Mr. Porter said. “The World Bank will be working with the Asian Development Bank and other partners to provide technical assistance, analysis, capacity building and investments so that GMS countries can work together to attract investors and improve services for their people.”

In Cambodia, where the average person earns only about US$380 a year and more than a third of the population lives below the poverty line, very few people (less than 18 percent) have access to electricity. In Kampong Cham and Stung Treng, two provinces where people have limited access to electricity, customers can pay up to US30 cents per kilowatt hour. After the new transmission lines are built, tariffs in these provinces are expected to drop to about US10-15 cents per kWh.

“With the GMS Power Trade Project, Cambodia will see a lot of positive impacts in the development of Stung Treng and Kampong Cham provinces,” said Mr Yim Nolson, deputy managing director of Electricite du Cambodia. “It will contribute to the poverty reduction and speed up the rural electrification in those provinces.”

“Power trade in the GMS can bring major economic and environmental benefits and improve energy security in the Mekong sub-region,” said Mohinder Gulati, Lead Energy Specialist for the GMS Power Trade Program. “Helping Mekong countries to realize those benefits will increase access to electricity for the poor and support the economic development of the region.”

Lao PDR, is also one of the poorest countries in the region, with a per capita income of US$460 a year. However, the country is rich in water and mineral resources. Through a strategy to develop hydropower for exports to neighboring countries, close to 50 percent of people now have access to electricity and the country is earning foreign exchange from power exports.

“We are fortunate to have a country endowed with so many natural resources and we are working to develop these in a sustainable way,” said Mr Viraphonh Viravong, Director General of the Department of Energy Promotion and Development. “This project will help us deliver reliable electricity to the Lao people, while also giving us the opportunity to expand our regional trade.”

During the preparation for the two projects, Cambodia and Lao PDR conducted comprehensive analyses of the social and environmental impact of the proposed transmission systems. This included extensive consultation with the people in the project areas and with civil society groups. The expected environmental and social impacts in both countries were found to be relatively minor.

The GMS Power Project in Cambodia is expected to be completed by August 2011 and the Lao Project by 2013.