An electricity transmission project to be undertaken by Malaysian owned Cambodian Transmission Limited (CTL) has managed to commercial funding and a financial guarantee from the Multilateral Investment Guarantee Agency (MIGA).
The project comprises a 230kV transmission network that connects the Phnom Penh region with power generators in the east and northeast of the country.
MIGA, a member of the World Bank Group, has issued guarantees that will support the refinancing of existing power transmission infrastructure in Cambodia’s capital, Phnom Penh, and its surroundings.
The move paves the way for commercial funding to replace financing previously offered by the Export-Import Bank of Malaysia Berhad (Malaysia EXIM).
The network also provides an interconnection to the Cambodia-Vietnam and Cambodia-Thailand borders in the south and northwest of the country respectively.
Encouraged by an improving economy and accelerated growth, the project became operational in 2013 and is part of an overall strategy to bring power from additional sources to the greater Phnom Penh region to meet the critical energy needs of the capital and its surroundings.
Issued to Mizuho Bank of Japan and ING Bank of the Netherlands through its Singapore Branch, the guarantees amount to $76 million and cover up the lenders’ loans for up to 10 years. The guarantees will provide protection against Currency Inconvertibility & Transfer Restriction, Expropriation, Breach of Contract, and War & Civil Disturbance.
At this early stage in the nation’s infrastructure, refinancing is anticipated to draw needed private investments from local and international developers.
This network expansion plan focuses on strengthening the interconnections between the nation’s Central-West and Central-South to accommodate transmission from new thermal and hydropower plants to the Phnom Penh region, where most electricity demand is currently concentrated.
This commercial financing project is MIGA’s first transaction in Cambodia.
The transaction also reflects the ongoing commitment of the international commercial lenders to Cambodia against the backdrop of the COVID-19 pandemic.
MIGA’s Executive Vice President, Hiroshi Matano, said: “Against the backdrop of the global COVID-19 pandemic, this transaction reflects the ongoing commitment of the lenders to support Cambodia’s longer-term goals of diversifying its economy, consolidating its electrification program, and reducing the cost of electricity to consumers.”
From an operating perspective, the refinancing will stabilise the project’s cash flow and reduce its exposure to interest rate risk. ESI Africa