Sihanoukville Special Economic Zone Coal Power Plant
Chinese Name: 西港特区热电项目
Location: Prey Nob District, Preah Sihanouk Province, Cambodia
Type of project: Energy (coal)
Project Developer: Sihanoukville Special Economic Zone Thermal Power Company Limited
Main Contractor: Wuxi Guolian Huaguang Electric Power Engineering Company Limited (a subsidiary of Wuxi Guolian Development (Group) Company Limited); design work conducted by Zhejiang Gas & Thermoelectricity Design Institute Company Limited
Known Financiers: Industrial and CommercialBank of China provided an export buyer’s credit; Sinosure and Bank of China provided buyer’s export credit insurance.
Project Status: Under construction, first unit online.
The Sihanoukville Special Economic Zone (SEZ) Coal Power Plant is a 100 MW power plant inside the Sihanoukville SEZ (西哈努克港经济特区; see the detailed profile here). Located in Preah Sihanouk Province and covering 11.13 square kilometres, this is one of Cambodia’s most important SEZs. Currently most factories in the zone produce textiles and apparel, luggage, leather goods, and wood products. In its second phase, there are plans to diversify into industries such as machinery. The SEZ is often referred to as a priority Belt and Road Initiative investment by the governments of Cambodia and China.
In 2019, work began on a 100 MW power plant inside the SEZ, specifically to supply the zone with a reliable energy supply. The plant includes two 50 MW generators. Phase 1 was expected to be ready for initial trial in October 2020 but was delayed by the COVID-19 pandemic and the first-generation unit was connected to the grid and started operation only on 1 July 2021. The inauguration ceremony for the project was attended by Cambodian and Chinese officials, including the Vice-Head of the United Front Work Department of the Central Committee of the Chinese Communist Party and the SEZ developer and contractor.
The Sihanoukville SEZ is owned and operated by Sihanoukville Special Economic Zone Company Limited, a joint venture between Jiangsu Taihu Cambodia International Economic Cooperation Zone Investment Company Limited (江苏太湖柬埔寨国际经济合作区投资有限公司) and Cambodia International Investment Development Group Company Limited (CIIDG). Jiangsu Taihu is owned by a joint venture between four Chinese companies, with Hongdou Group holding the largest stake. Hongdou (or Hodo) is a major private company from Jiangsu Province. CIIDG is owned by family members of Cambodian Senator Lao Meng Khin. Khin is also on the board of directors of Sihanoukville Special Economic Zone Company Limited.
In 2018, Sihanoukville Special Economic Zone Company established the subsidiary Sihanoukville Special Economic Zone Thermal Power Company Limited (西港特区热电有限公司) to develop the coal plant. This company subsequently contracted Wuxi Guolian Huaguang Electric Power Engineering Company Limited (无锡国联华光电站工程有限公司) to build the plant. The ultimate parent of this company is Wuxi Guolian Development (Group) Company Limited, which is a Wuxi Municipality state-owned enterprise. Zhejiang Gas & Thermoelectricity Design Institute Company Limited (浙江城建煤气热电设计院有限公司) was contracted to design the power plant.
In June 2019, a financial agreement was signed with the Industrial and Commercial Bank of China (ICBC) Phnom Penh Branch. In July 2021, an agreement was signed with the Jiangsu Province branches of Sinosure and Bank of China to provide buyer’s export credit insurance for the plant.
- Pollution: The power plant will result in increased pollution in the area. Local people are heavily dependent on agriculture and any pollution of water sources will have potentially serious impacts on livelihoods, while air pollution and dust also risk harming local people’s health.
- Climate change: The power plant will increase Cambodia’s reliance on fossil fuel energy generation, which produces carbon dioxide and contributes to the climate crisis.
- Other: When fully operational, the plant will make the SEZ entirely dependent on coal power. This will impact on the zone’s competitiveness as companies seek production bases with clean energy options.
Until recently, Cambodia’s energy sector did not rely heavily on coal power. This has now begun to change. With Cambodia relying on hydropower for around 50% of its energy needs, the drought of 2019 exposed the country’s vulnerability in meeting domestic power demand. This resulted in the fast-tracking of approval for two new power plants in Botum Sakor (see the detailed profile here) and Oddar Meanchey (see the detailed profile here) and a deal to buy power from proposed coal plants in southern Laos. The Sihanoukville SEZ has plans to eventually host 300 factories, and a reliable power supply is essential to support this expansion. The SEZ developer therefore took the initiative to develop its own plant to meet this demand.
The choice of a coal plant over more sustainable renewable options is a concern to environmentalists. Cambodia has said on many occasions that it is committed to combating climate change, yet in the past few years has rapidly expanded its coal power production. Although in 2020 around half of the country’s energy came from hydropower dams, the current development of coal plants, and plans to increase the use of natural gas could flip Cambodia’s energy mix to being almost 75% dependent on fossil fuels.
This will make it harder for Cambodia to meet its climate change commitments and impact on the country’s competitiveness as companies seek production bases with clean energy options. Several international brands that source from Cambodia have committed to move towards having supply chains that are 100% powered by renewable energy. When this is not possible, they will pay carbon offsets. In August 2020, several major brands from the United States and the European Union—including H&M, Nike, Adidas, Gap, Puma, and Specialized—sent a letter to the Ministry of Economy and Finance raising concerns that Cambodia’s shift to coal power would impact on the viability of their business in the country. Some of these companies source from the Sihanoukville SEZ and, as the zone shifts to being 100% coal powered, they may have to reconsider sourcing from the area (for more discussion of this issue, see this essay in the Map’s blog).
Bräutigam, Deborah and Xiaoyang Tang. 2012. ‘Economic Statecraft in China’s New Overseas Special Economic Zones: Soft Power, Business or Resource Security?’ International Affairs 88(4): 799–816. Link.
Grimsditch, Mark. 2021. ‘Chinese Energy Investment in Cambodia: Fuelling Industrialisation or Undermining Development Goals?’ The People’s Map of Global China, 6 May. Link.
Royal Government of Cambodia. 2005. ‘Sub-Decree “On the Establishment and Management of the Special Economic Zone”.’ Sub-Decree No. 148 ANKr.BK. Link.
Sihanoukville Special Economic Zone Company Limited. website. Link.
Thame, Charlie. 2017. ‘SEZs and Value Extraction from the Mekong: A Case Study on the Control and Exploitation of Land and Labour in Cambodia and Myanmar’s Special Economic Zones.’ Focus on the Global South website. Link.Updated on 7 October 2021.