Cambodia’s Electricity Sector in the Context of Regional Electricity Market Integration

Savong Tuy

Chapter 7 in Energy Market Integration in East Asia: Theories, Electricity Sector and Subsidies, pp 141-172 from Economic Research Institute for ASEAN and East Asia (ERIA)

Abstract: Cambodia’s integration into the regional electricity market is a policy priority. With a constrained supply-side, the increasing demand posts a critical challenge for electricity sector development. Against this backdrop, this paper provides an overview of the current situation of Cambodia’s electricity sector and explores other critical issues in the sector. Diesel and heavy fuel oil is the major source of power generation as hydropower will be the successor source in the future. Tariffs range from US¢9-25/kWh for EDC grid and US¢40-80/kWh for rural areas. Electrification rate through grid expansion is about 24.72 per cent in 2009. Cambodia’s electricity tariff remains one of the highest in the region and the world. With a consolidate license, EDC, the state-owned utility, is the dominant key player in the electricity market. Two main institutions playing important roles in governing the electricity sector include MIME and EAC. The electricity sector remains underinvested. Only large scale investment projects are preferred in the market. High-voltage transmission connections, large-scale hydropower dams, and coal-fired plants have been the focused priority for power development thus far. Barriers to investments include huge capital requirement for large-scale projects, insufficient legal and institutional framework, and high administrative costs. Therefore, it is essential that national grid development is accelerated and more investment is encouraged in order to reduce current high tariffs. Investment climate must be enhanced to be conducive to foreign and local investment.

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