$130M set for electricity subsidies
THE government has allocated approximately $130 million to offset losses in electricity consumption this year, aiming to support the populace, especially key economic sectors, according to the Ministry of Mines and Energy.
Energy minister Keo Rattanak made the announcement at the November 21 “Mining and Energy Policy in Cambodia” forum in Phnom Penh. He explained that the government has introduced a special tariff for agriculture, animal husbandry and processing agricultural products, offering a reduced rate of 480 riel per kilowatt-hour (KWh) on night-time water pumping.
He noted that the industrial sector will benefit from reduced electricity prices from October to December this year. The tourism sector will also enjoy a reduction in costs for three months, from December to February 2024.
“The reduction in electricity prices for tourism is applicable nationwide for hotels, guesthouses, resorts and restaurants serving the sector,” Rattanak stated.
However, he cautioned that a permanent reduction in price is unfeasible as it might risk the bankruptcy of the country’s electricity institution, Electricite
du Cambodge (EDC).
“This year, EDC is prepared to absorb a loss of $130 million in subsidies. Exceeding this amount could lead to [insolvency]. We are lowering the price responsibly to ensure the reduction doesn’t drive us into bankruptcy,” he remarked.
Ho Vandy, an adviser to the Cambodia Association of Travel Agents (CATA), stated that the policy further motivates tourism service providers, allowing tour operators to consider reducing their service charges as a means to attract more tourists to the Kingdom.
He expressed concern that despite government support
and encouragement to the industry through budget allocation, tax incentives and reduced power prices, the initiatives would be ineffective if the private sector remains complacent and does not strengthen itself post-pandemic.
“The private sector should consider devising plans and strategies to rehabilitate and develop their businesses, not just remain idle during the crisis, but seek ways to improve,” he advised.
Keo Mom, president of the Cambodian Women Entrepreneurs Association (CWEA), emphasised that small and medium enterprises (SMEs) require more government support in managing electric costs.
“We acknowledge the government’s consideration of reducing electricity prices. While SMEs desire lower costs, we also understand the need to maintain the government’s revenue stability, as the private and public sectors are indispensable partners,” she noted.
Rattanak added that in the nearly three months of the government’s seventh mandate, the mining and energy sector continues to fulfil its pre-election promise of providing sufficient power supply, committing to not increase prices and striving to reduce them to a level acceptable for the people, private entities and the government.
He urged the public to use electricity judiciously and stated that the ministry plans to collaborate with stakeholders to prohibit the import of high-consumption electrical equipment, permitting only those with energy-saving functions.
In 2022, during its sixth mandate, the government provided $100 million to share in the losses of EDC for the first time, attributed to the global crisis and the Russia-Ukraine conflict, including the economic sanctions imposed on Russia.