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Published on 26/06/2015

Access to Funding for Water and Electricity Enterprises in Cambodia

In Cambodia 400 electricity companies and 150 water businesses provide – on a daily basis – network services to the inhabitants of semi-urban and rural areas. The companies face a major challenge to developing their infrastructures: access to conventional bank funding. In this context, a funding access programme created by the European Union is being implemented by the AFD. GRET is carrying out two innovative component parts. Granting bank loans (between $50,000 and $500,000) to small and medium-sized water and electricity companies is being made easier by three complementary funding tools (non-sovereign loan to a commercial bank, bank guarantee, and a subsidy for local assistance) coming on stream. It fits into a logic of upscaling, with the ambition of connecting 50,000 households to the drinking water network and bringing electricity to 35,000 families (i.e. nearly 410,000 direct beneficiaries) by 2018. Local technical investment represents no more than 8% of the total amount of the investments on loans.

This programme is made up of a $15,000,000 credit line (non-sovereign concessional loan) opened at the Foreign Trade Bank (FTB), one of Cambodia’s national banks, as well as a $10,000,000 back-up line. GRET is leading on this programme, in partnership with the Artelia consultancy, See/Saw and Isea, the services centre for Cambodian water operators which originated with GRET and which is in the process of being institutionalised. In particular, GRET and its partners are backing 50 water and electricity companies in setting up their investment project and loan request as well as helping them to acquire new business management skills. GRET is also coordinating the programme’s numerous partners. The start-up workshop took place in Phnom Penh on 29 April, and present were the AFD, the European Union, the two supervising ministers (those for industry and local crafts on the one hand and for mines and energy on the other hand), as well as the programme’s three other partners (the Cambodian Electricity Entrepreneurs’ Association, The Water Entrepreneurs’ Association, the Electricity Sector Reglating Authority). The first loan contract (for $500,000) was signed with Ms. Chhorn Dalis, a water operator.

At the beginning of June two credit line promotion workshops were held: on the 5th for water and on the 9th for electricity, in partnership with the associations representing water and electricity entrepreneurs. They were opened by Ek Sonn Chan, Junior Minister for Water, and Ty Norin, Director of the Electricity Sector Regulating Agency, respectively. This event saw the participation of 87 water companies and 160 electricty companies.

For further information on this project