Japanese ODA Loan

Ex-Ante Evaluation
1. Name of the ProjectCountry: Kingdom of Cambodia
Project: Phnom Penh City Transmission and Distribution System Expansion Project
Loan Agreement: July 10, 2014
Loan Amount: 6,480 million yen
Borrower: The Royal Government of Cambodia
2. Background and Necessity of the Project(1) Current State and Issues of the Power Sector in Cambodia
In recent years, the Cambodian economy has continued to show stable growth, driven by
the sewing industry, tourism, and agriculture. With a GDP growth rate of 7.3% achieved in2012, a high rate of growth is predicted to continue in the future as well. Along with thiseconomic growth, the demand for electrical power has also rapidly increased. The volume ofgenerated and imported electricity from 2002 to 2012 increased an average of 17.2% annuallyand the expansion of facilities in the power sector is a pressing issue. In particular, Phnom
Penh is the social and economic center of the country; with a population of 1.5 million, it
accounts for approximately 70% of the domestic electricity demand. The Electricité duCambodge (EDC) has made ensuring the stable supply of power to this region its top priority.
However, since the capacity of current transmission and distribution facilities has reached its
limit, and a power control system has not yet been developed, the area affected by power
outages is large and it takes a long time to restore power. In order to improve this situation, it
is essential to reinforce transmission, substation and distribution facilities as quickly aspossible.
(2) Development Policies for the Power Sector in Cambodia and the Priority of the ProjectIn the Rectangular Strategy Phase Ⅲ formulated by the Government of Cambodia,
electrical power development is designated as a priority area in infrastructure development,
which is one of the four main pillars of the strategy. Additionally, in the National StrategicDevelopment Plan (2009-2013), the electric power sector was designated as one of thepriority issue fields. As part of this, the government will satisfy urban electrical power
demands and develop transmission facilities in order to attain a stable supply of electricity.
(3) Japan and JICA’s Policy and Operations in the Power Sector
In the County Assistance Policy for Cambodia formulated by Japan in April 2012, theDevelopment of Economic Infrastructure has been designated as one of the Pillars of Priority.
Since the Project prioritizes assistance to the development of stable electricity supply system
which is a critical factor for attracting foreign direct investment, it is in line with Japan’s
assistance policy.
As for past assistance in the electric power sector, power grid transmission lines are currently
under construction between Kampot and Sihanoukville as part of the yen-loan GreaterMekong Power Network Development Project (March 2007-November 2014). Furthermore, atechnical cooperation project entitled Project for Improvement of Transmission System
Operation and Maintenance (January 2013-September 2015) is currently being implemented
to improve the capacity of EDC for the operation and maintenance of substation andtransmission systems.
(4) Other Donors’ Activities
Through their Rural Electrification Fund (REF), the World Bank has provided rural
electrification assistance for the Cambodian electric power sector. Additionally, ADB,Germany, and China, etc. have also provided rural electrification assistance by expanding thepower grid.
(5) Necessity of the Project
The Project will stabilize the Cambodian power supply and improve access to electricity.
Thus, since this is in line with the country’s issues and development policies, JICA’s support
in implementing the Project is highly necessary and relevant.
3. Project Description(1) Project Objective
By building new substations and expanding existing substations, installing transmission
and distribution lines, and introducing power grid stabilization equipment for the capital cityof Phnom Penh, the Project will increase the stability of the electricity supply in themetropolitan area, and thus contribute to the economic development of Cambodia.
(2) Project Site/Target Area
Phnom Penh City
(3) Project Components
1) Transmission and Distribution System Expansion (Building 115kV new transmission
lines: 13.4km, Building 22kV new distribution lines: 19.6km, Building new data
communications cable: 14.0km), construction of new substations and substation
expansions (2 new, 2 expanded). (International Competitive Bidding)2) Consulting services (basic design, tender assistance, construction management, etc.)(Short list method)(4) Estimated Project Cost
8,645 million yen (including the yen loan of 6,480 million yen)(5) Schedule
Scheduled from July 2014 to December 2018 (total of 54 months). Project completion isdefined as the start of the actual operation (January 2018).
(6) Project Implementation Structure1) Borrower: The Royal Government of Cambodia
2) Guarantor: None
3) Executing agency: Electricité du Cambodge (EDC)
4) Operation/Maintenance/Management: Electricité du Cambodge (EDC)

(7) Environmental and Social Considerations/Poverty Reduction/Social Development
1) Environmental and Social Considerations① Category: B② Reason for the Categorization: Since this Project does not include any sectors or
characteristics that are liable to cause adverse environmental impacts nor sensitive
areas specified in the JICA Guidelines for Environmental and Social Considerations(published in April, 2010), it is unlikely that the Project will have severe negative
impact on the environment.
③ Environmental Permit: An Initial Environmental Impact Assessment (IEIA) reportconcerning the Project was created and has been approved by the Ministry ofEnvironment.
④ Anti-Pollution Measures: During construction, measures will be taken in regard to air
quality and noise, etc. including spraying water to alleviate dust and using low-noise
equipment and construction methods. Waste materials generated after handover will
be appropriately processed by a waste management company. With this, adverse
impact on the environment is planned to be minimal.
⑤ Natural Environment: The target area for the Project is not in a sensitive area such as anational park, nor in the surrounding area of such; therefore, adverse impact on theenvironment will be minimal.
⑥ Social Environment: Since construction for the Project will be conducted within
existing EDC power facilities and on government-owned land, no land acquisition or
resettlement is necessary.
⑦ Other Aspects/Monitoring: During the construction period of the Project, a contractor
will monitor air quality, noise, and water quality, etc. under the supervision of EDC.
After handover, it is planned for EDC to monitor waste materials, etc.
2) Promotion of Poverty Reduction
None in particular3) Promotion of Social Development (e.g. gender perspective, measures for infectious
diseases including AIDS, participatory development, and considerations for persons
with disabilities, etc.)
None in particular(8) Collaboration with Other Schemes and Donors
Through the technical cooperation, Project for Improvement of Transmission System
Operation and Maintenance (January 2013-September 2015), the capacity of EDC for theoperation and maintenance of substation and transmission equipment is being strengthened. It
is expected that the results of this will be utilized in the maintenance management ofequipment installed for this Project.
(9) Other Important Issues
Since 2011, the number of Japanese companies expanding into Cambodia has increased
greatly. Companies in the automobile parts, banking, and transport industries have continued

to move into the country. Since the offices of these Japanese companies are concentrated inPhnom Penh, a stable electricity supply will also contribute to supporting Japanesecompanies.
In addition, since transmission loss will be reduced through the Project, greenhouse gas
emissions are projected to be reduced in the amount of 4,062t of CO2 per year. (Next year
after project completion)
4. Targeted Outcomes(1) Quantitative Effects
1) Performance Indicators
Indicators

Baseline(Actual value in 2012)

Target (2020)(Expected value 2 years
after project completion)

Transformer availability factor (%)-

76

Electricity supply (MWh/year)

-

1,170

Outage times of substation(times/year)

70

Transmission line availability
factor (%)-672) Internal Rate of Return
Based on the following preconditions, the Economic Internal Rate of Return (EIRR) will be
16.84% and the Financial Internal Rate of Return (FIRR) will be 10.63%
EIRR
Cost: Project cost (excluding tax), operation and maintenance expenses
Benefit: Increased electrical power supply, improved supply reliability (reduction in power
outage time), reduction of loss
Project life: 25 years(2) Qualitative Effects: Stabilization of domestic power supply, promotion of investments,
revitalization in industry, etc.
5. External Factors and Risk Control
Ahead of the Project, EDC is planning a project to build the Hun Sen Park substation andunderground transmission lines between Hun Sen Park and GS2 using investment from aChinese company (Build, Lease and Transfer methods). Since the transmission lines to bedeveloped for the Project are planned to be connected to the Hun Sen Park substation, itsconstruction progress and completion schedule will be checked regularly. In the case thatdelays, etc. are observed, steps will be taken to minimize the effects of this on the Project.
6. Lessons Learned from Past Projects(1) Results of Evaluation of Similar Past Projects

From Ex-Post Evaluation results, etc. from the Power Distribution System Reinforcement
Project in Thailand, it was learned that the need to enhance employees’ technical skills isstronger when operation of the distribution system becomes more sophisticated. Therefore,
based on distribution system automation, it is desirable to strengthen the capacity ofemployees to make better use of the infrastructure developed by the Project.
(2) Lessons for the Project
The introduction of equipment not yet used in Cambodia is also planned for this Project.
Since further capacity building for employees is thus necessary, a technical cooperation
project entitled Project for Improvement of Transmission System Operation and Maintenance
was started in January 2013. With this, the capacity of EDC for the operation andmaintenance of substation and transmission equipment is being enhanced.
7. Plan for Future Evaluation(1) Indicators to be Used
1) Transformer availability factor (%)2) Electricity supply (MWh/year)
3) Outage times of substation (times/year)
4) Transmission line availability factor (%)5) Economic Internal Rate of Return (EIRR) (%)6) Financial Internal Rate of Return (FIRR) (%)(2) Time of Future Evaluation
Two years after project completion
END