Germany set to launch first loan to Cambodia

THE German Embassy on Thursday announced its first loan to the Kingdom of Cambodia of € 30 million ($34.06 million), which will be used to upgrade its rural energy grid.

The embassy said in a statement after a meeting with Electricite du Cambodge (EDC – Electricity Authority of Cambodia) that by investing in rural energy efficiency, the EDC can reduce power losses significantly, improve access in remote areas and increase the reliability of power supply.

The improved access to power grids in rural Cambodia also contributes to Cambodia’s ambitious targets to reduce greenhouse gas emissions, the statement said.

“Reliable and climate-friendly energy access is the engine for the Kingdom’s future development and will boost investment in the country,” said German Ambassador Ingo Karsten. “It increases energy efficiency, access in remote areas and allows for lower tariffs. Stronger grids are the basis for future investments in solar energy, which has a huge potential in Cambodia.”

The new project marks the first step in development cooperation between Cambodia and Germany and reflects the Kingdom’s advance towards becoming a lower-middle income country.

This loan is funded by the German Ministry for International Development’s Climate Technology Initiative and will be implemented by Germany’s KfW’s development bank.

EDC managing director Keo Rattanak said after the meeting that the loan will benefit people in rural Cambodia.

“This loan will cover a lot of people, especially the poor who need an affordable electricity service,” Rattanak said.

He said it will help boost clean energy, which is good for climate change, local households’ finances, education and health.

“We expect this project to help reduce the use of diesel generators, which pollute more.”

Centre for Policy Studies director Chan Sophal welcomed Germany’s loan, noting that developing electricity in rural areas is vital to developing the economy of rural families and enterprises as well as promoting the growth of the country’s economy.

“This is really great news. Electricity has been scarce, erratic and expensive. It is one of the necessities for the advancement of households and modernisation of rural enterprises.

However, the loan’s signing date is not set and the loan duration and interest will first be negotiated between KfW and the Ministry of Economy and Finance, according to a German Embassy spokesperson.