Chinese Name: 波东沙哥煤电站
Location: Botum Sakor District, Koh Kong Province, Cambodia
Type of project: Energy (coal)
Project Developers: Botum Sakor Energy Co., Ltd. (subsidiary of Royal Group)
Main Contractors: Sinosteel Engineering & Technology Corporation Ltd. (subsidiary of Sinosteel Group Corporation Limited)
Known Financiers: n/a
Cost: 1.34 billion USD
Project Status: Under construction
In February 2020, Cambodia’s Council of Ministers approved two new coal plants, one in Oddar Meanchey Province and the Botum Sakor plant in Koh Kong Province. Six weeks later, the National Assembly approved the projects, with the Senate following suit a few days later. This process appears to have been fast-tracked, and the National Assembly voted at an extraordinary session requested by the Prime Minister. In August 2020, a sub-decree was issued by the government cutting 168 hectares from the Botum Sakor National Park and reclassifying it as state private land, allowing it to be legally leased to the company for 38 years.
The power plant is expected to cost 1.34 billion USD, with a generating capacity of 700 MW. Scheduled to bring 350 MW online in 2023 and an additional 350 MW in 2024, the project will be constructed under a Build-Operate-Own agreement, which will last 35 years. The government has agreed to purchase 80% of power generated at 7.3 cents per kilowatt. Media reports indicate that 70% of the financing will come from bank loans, with the remainder coming from the developer’s equity. However, it is unclear which banks will provide this financing.
The project developer is Botum Sakor Energy Co. Ltd., a subsidiary of the local conglomerate Royal Group, which is owned by Kith Meng, a powerful and well-connected tycoon. Royal Group has no experience developing a power plant, and the construction work will be handled by Sinosteel Engineering & Technology Co. Ltd. Royal Group and Sinosteel first signed an agreement to cooperate on the development of a coal plant back in 2016 during a visit to Cambodia by Chinese President Xi Jinping. Prime Minister Hun Sen then met with Sinosteel’s chairman in Beijing during a state visit in January 2019, where they discussed the coal plant.
In October 2020, the Chinese government entrusted the state-owned Sinosteel to China Baowu Steel, another central state-owned enterprise, apparently to manage the huge debts that Sinosteel has accumulated due to its aggressive recent expansion (the company has defaulted on several major loans in recent years). This takeover does not appear to have slowed the project down though, and the following month Sinosteel Engineering & Technology signed a 1.1 billion USD engineering, procurement, and construction (EPC) contract with Botum Sakor Energy.The plant will run on imported coal, and the development plan includes a jetty for docking and offloading coal from abroad. In addition to the power plant and dock, the company is required to develop water infrastructure for the plant and transmission infrastructure connecting the plant to the Botum Sakor substation.
According to the developer and provincial government officials, the project affects 58 families who will be required to relocate. In July 2020, Royal Group told the media that all land claims were settled, and everyone had agreed to compensation. However, at the time there were conflicting reports. CNC news (owned by Royal Group CEO Kith Meng) reported that all 58 families had accepted compensation, as did various online media outlets, and the Khmer Times. However, provincial media stated only 26 had accepted, and a video posted on Facebook showed landowners shouting and complaining at the end of the meeting and saying they did not accept the deal.
While it is likely that compensation agreements have now been reached with households residing or farming within the area demarcated for the plant, it is also unclear whether a comprehensive assessment has been conducted of those who will be impacted by associated infrastructure such as the coal jetty, new roads, and transmission lines. Likewise, there is no public information on the extent to which livelihood impacts have been studied. It can be expected that local residents and farmers will be impacted by increased traffic, changes in water use and availability, as well as wastewater and airborne emissions from the plant. As the plant will likely use seawater for cooling, it can also be assumed that there will be impacts on fisheries, which are a major source of income for people in this coastal area. Other coal plants in Cambodia have been associated with severe coal dust pollution which continues to impact severely on surrounding villages.
Beyond negotiations regarding compensation for those directly affected by land acquisition, community consultation on the project has been minimal, and there is a dearth of information on exact locations of project infrastructure and what technology will be used. Statements from officials reported in local media indicate that an environmental impact assessment has been conducted, but it is unclear if it has been approved by the Ministry of Environment. The EIA has not been made public, and civil society groups have not been consulted. At the time the project area was cut from the national park and reclassified, local civil society leaders raised concerns that it was done without consultation and without any published impact assessment. Without access to these assessments, the public can only speculate on the impacts these projects will have, and how they will be mitigated.
At present, Cambodia generates 50% of its energy via hydropower dams, but ongoing expansion of coal and plans for developing natural gas infrastructure could shift the country’s energy mix drastically to almost 75% fossil fuel. As a result, Cambodia may face the withdrawal of major international brands who produce in or purchase products from Cambodia, and do not want to be associated with manufacturing powered by fossil fuel.
A growing number of global brands have signed on to the RE100 initiative. This includes several major clothing brands who produce or source from Cambodia. Under RE100, companies commit to working towards producing and/or sourcing from factories that are 100% powered by renewables, or, when this is not possible, to offset the difference. The more coal present in the Cambodian energy mix, the more expensive those offsets will be, which could push companies to relocate to Vietnam or elsewhere. Five major global brands—H&M, Adidas, Puma, Gap, and Specialized— articulated these concerns to the Cambodian government in a private letter obtained by regional media. One of these brands has made its position known to the Cambodian government and in public that if grid energy does not become cleaner ‘industry will find more attractive countries that are able to offer such energy opportunities.’ If other brands follow this, the economic impacts for Cambodia could be huge, as the garment sector is the backbone of the economy, employing at least 800,000 people, the majority of which are women.