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43349 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized 43349 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Cambodia Energy Sector Strategy Review Issues Paper April 2006 A WORLD BANK DOCUMENT Executive Summary ii CURRENCY AND EXCHANGE RATES Currency Unit – Cambodian Riel Exchange Rate (as of August 2003): CR 3,835 Fiscal Year (January 1 to December 31) Vice President (Acting) Jeffrey Gutman Country Director Ian Porter Sector Director Christian Delvoie Country Manager Nisha Agrawal Sector Manager Junhui Wu Task Team Leader Zhi Liu Energy Strategy for Cambodia iii ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank AusAID Australian Agency for International Development Bn Billion BPD Barrels Per Day BTU British Thermal Unit COM Council of Ministers CNPA Cambodia National Petroleum Authority CPSS Cambodia Power Sector Strategy (IBRD, 1999) CR Cambodian Riel DFID Department for International Development (UK) EAC Electricity Authority of Cambodia EDC Electricite du Cambodge E&P Exploration and Production ESS Energy Sector Strategy FRP Financial Recovery Plan GDP Gross Domestic Product GMS Greater Mekong Sub-region GOC Government of Cambodia gwh Gigawatt-hour (1,000 Kilowatt-hour) HFO Heavy Fuel Oil HV, EHV High Voltage, Extra High Voltage ICB International Competitive Bidding IDA International Development Agency IMF International Monetary Fund IPP Independent Power Producers IRITWG Infrastructure & Regional Integration Technical Working Group JBIC Japan Bank for International Cooperation JICA Japan International Cooperation Agency kwh Kilowatt-hour (1,000 Watt-hour) LDO Light Diesel Oil LV, MV Low Voltage, Medium Voltage MMCFD Million Cubic Feet Per Day MEF Ministry of Economy and Finance MIME Ministry of Industry, Mines and Energy MOC Ministry of Commerce OMC Oil marketing company PDP Power Development Plan PPIAF Public Private Infrastructure Advisory Facility RE Rural Electrification REEs Rural Electrification Enterprises RETP Rural Electrification and Transmission Project (IDA) RGC Royal Government of Cambodia T/A Technical Assistance TOR Terms of Reference TRANSCO Transmission Company USc US cents VAT Value Added Tax WB World Bank Executive Summary iv ACKNOWLEDGEMENTS This report was prepared by a World Bank team comprising Veasna Bun, Chandrasekar Govindarajalu, Waqar Haider, Zhi Liu, Darayes Mehta, Francisco Quintana, and Rebecca Sekse, under the general guidance of Ian Porter, Junhui Wu, and Nisha Agrawal. Bridget McIntosh contributed to the section and annex on biomass energy. Peer reviewers were Enrique Crousillat, Mohinder Gulati, Anthony Jude (ADB) and Tianhua Luo (ADB). Over the course of the study, the team benefited from various discussions and workshops with officials of relevant government agencies (including the Ministry of Economy and Finance, Ministry of Industry, Mines and Energy, Ministry of Planning, Electricity Authority of Cambodia, Electricite du Cambodge, Cambodia National Petroleum Authority, and Forestry Administration), representatives of donor agencies (including ADB, DFID, IMF, JBIC, JICA, KfW, and UNDP) and other organizations (including ChevronTexaco, GERES, Shell, SME Cambodia, Sokimex, and TOTAL). Written comments on the draft version were received from H.E. Ty Norin (Electricity Authority of Cambodia), Hashimoto Nobuo (JICA Expert), Apurva Sanghi and Eric Sidgwick. Narya Ou provided able administrative assistance. Naya Kenman edited the final report. Energy Strategy for Cambodia v Cambodia: Energy Sector Strategy Review Issues Paper Table of Contents Currency and Exchange Rates ............................................................................................ ii Abbreviations and Acronyms ............................................................................................iii Acknowledgements............................................................................................................iii Table of Contents...............................................................................................................iii Executive Summary...........................................................................................................iii Energy Sector Strategy Review .............................................................................iii Strategic View of the Energy Sector......................................................................iii Electric Power Sub-Sector .....................................................................................iii Rural Electrification...............................................................................................iii Petroleum Industry.................................................................................................iii Issues in the Development of the Sector................................................................iii Actions and Thematic Studies under the Next Step Work Program......................iii Table E1: Activities for the Strategy Exercise Program...........................iii Chapter 1. Energy Strategy for Cambodia.......................................................................... 3 Introduction and Overview ..................................................................................... 3 Chapter 2. The Strategic Context........................................................................................ 3 Energy Challenges in Cambodia............................................................................. 3 Box 2.1: Cambodian Rectangular Strategy: The Four Growth Rectangles 3 Considerations for Energy Strategy Study.............................................................. 3 Strategic Considerations ......................................................................................... 3 Linkages to National and Social Objectives ........................................................... 3 Strategic Vision for the Energy Sector ................................................................... 3 Chapter 3. Electric Power in Cambodia.............................................................................. 3 Overview................................................................................................................. 3 Legal and institutional framework.............................................................. 3 Electricity generation and supply................................................................ 3 Table 3.1: Installed Capacity/Peak Output (MW) and Energy Output (Gwh); EDC Supply Areas ......................................................................... 3 Tariffs and losses ........................................................................................ 3 Table 3.2: Electricity Tariffs in Phnom Penh and Adjustments in Late 2005............................................................................................................. 3 Power demand............................................................................................. 3 Table 3.3: Electricity Growth Forecast...................................................... 3 Table 3.4: System Expansion Plan.............................................................. 3 Hydropower ................................................................................................ 3 Table 3.5: Potential Hydropower Projects.................................................. 3 Issues and constraints of the power sub-sector........................................... 3 Greater Mekong sub-region (GMS)............................................................ 3 Imported Fuel and Electricity Generation............................................................... 3 Tax Structure for Imported Oil and Petroleum Products............................ 3 Table 3.6: Retail Fuel Prices in ASEAN Countries.................................... 3 Executive Summary vi Electricity generation.................................................................................. 3 Electricity costs versus levies ..................................................................... 3 Factors Influencing Electricity Costs...................................................................... 3 High tariffs imposed on imported oil and petroleum products................... 3 Table 3.7: Heavy Fuel Oil (HFO) Price Structure ...................................... 3 Table 3.8: Diesel Oil (DO) Price Structure................................................. 3 Efficiency of power plants.......................................................................... 3 Non-competitive deals with the IPPs.......................................................... 3 Table 3.9: Electricity production cost in 2003 of selected IPPs ................. 3 Overall Actions to Reduce Electricity Costs .......................................................... 3 Short term actions ....................................................................................... 3 Medium term measures............................................................................... 3 Long term measures.................................................................................... 3 The power sector in the context of GMS power trade................................ 3 Chapter 4. Rural Electrification and Renewable Energy.................................................... 3 Introduction............................................................................................................. 3 Rural Electrification...............................................................................................
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