Work starts on hydropower project in Cambodia

PHNOM PENH, Cambodia

A Chinese company began work Thursday on a hydroelectric dam in Cambodia, the second Chinese dam project launched this week in the country where only about a quarter of the population has electricity.

The two projects are among several hydroelectric dams planned to reduce power shortages in Cambodia although activists warn they could cause environmental harm.

State-owned China Huadian Corp., one of China's biggest power companies, will build the 338-megawatt dam on the lower Russei Chrum river in Koh Kong province, with an investment of about $500 million. The project is due for completion by 2014.

A project launch ceremony was held in the capital, Phnom Penh, about 130 miles (210 kilometers) east of Koh Kong province.

Industry Minister Suy Sem said the power generated from the dam will be distributed to neighboring provinces and the capital.

"Cambodia will benefit greatly from this dam. It will provide us with a huge power capacity and help us to reduce the use of oil for producing power," Suy Sem said.

Cambodia's economy has grown rapidly over the past decade but poverty remains widespread.

Electricity generation is underdeveloped, and most power plants use fossil fuels. Cambodia also buys electricity from neighboring Vietnam and Thailand. Many people rely on generators.

By 2009 some 26 percent of Cambodia's 14 million people had access to regular electricity, said Heng Kunleang, director of the electricity division at the Industry Ministry.

Its electricity prices are among the highest in the world, which is also a major source of complaint from investors in Cambodia.

In a bid to meet future electricity demands, the government has identified 21 potential hydroelectric dam sites across the country.

But environmentalists have voiced concerns about the impact those projects will have.

In a 2008 report, the U.S.-based International Rivers Network said "poorly conceived hydropower development could irreparably damage" Cambodia's environment and also extract a social cost.

On Monday, the China National Heavy Machinery Corp. started building a $540 million hydropower plant in the Koh Kong province that will generate up to 246 megawatts. It is also due for completion by 2014.

China is a leading foreign investor in Cambodia.

Some 349 Chinese companies have been invested in Cambodia mainly in agriculture projects, construction and dams, the Chinese Embassy said recently.