Ex-Ante Evaluation (for Japanese ODA Loan)
Private Sector Investment Finance Division,
Private Sector Partnership and Finance Department, JICA
1. Name of the ProjectCountry: Kingdom of Cambodia
Name of the Project: Kampong Chhnang Solar Power Project
Loan Agreement: August 25, 2021
Borrower: Prime Road Alternative (Cambodia) Company Limited
2. Background and Necessity of the Project
1. Development Relevance of the Project(1) Current State and Issues of the Electricity Sector in Cambodia and the Project’s
Relevance to the Development Policies of the Cambodian Government
During the past decade, Cambodia’s average annual real GDP growth rate has beenhigh, at around 7%, and as the country grew steadily, electricity demand in Cambodia grew
rapidly, at an annual rate of 18% on average, from 695 GWh in 2003 to 8,650 GWh in 2018.
Cambodia had equipment capable of generating 2,177 MW of electricity in 2018 with its
power sources consisting of hydraulic power (61%), coal-burning thermal power (25%),
diesel power (12%), and renewable energy (2%). Since it could not meet demand withdomestic power sources alone, the country began to import electricity from Thailand in
2007, Vietnam in 2009, and Laos in 2010, and in 2018, it depended on imports for about
16% of the electricity supplied. Partly because the substantial lack of power supply
capabilities often caused planned and unplanned blackouts in the dry season of 2019
(March to May), the Cambodian government has encouraged independent power
producers (IPP) to develop power sources in the country as it strives to strengthen thedomestic power supply system. By promoting not only hydroelectric power generation,
which involves draught risks, and thermal power generation, which entails fundprocurement risks as it becomes increasingly large scale, but also renewable energy,
including photovoltaic power generation, it aims at meeting electricity demand, which isexpected to continue rising sharply, while pushing for the diversification of power sources.
Cambodia has not introduced the Feed in Tariff system as Thailand and Vietnam have,and acquiring relatively large tracts of land involves risks. For these and other reasons,photovoltaic power generation projects have not actively been carried out in the country.
The Project will be a model photovoltaic power generation project in which Electricite duCombodge (EDC) encourages active participation by investors through the provision ofland and incidental equipment such as power transmission and distribution networks, andthis is expected to contribute to the spread of photovoltaic power generation in the country
in the future.
In its Electric Power Development Plan of 2015 (fiscal 2008 to 2020), the Cambodian
government positioned electricity as one of the sectors to which it would give top priority asit aimed at becoming a middle-income country by 2021. It has also revised its
Electricity/Energy Master Plan (fiscal 2020 to 2030), and the revised Plan calls for thegovernment to raise power supply capabilities, including reserve ones, to 12,000 MW by
2030 and increase photovoltaic power generation to up to 1,800 MW by introducing 100
MW power stations annually. In the Nationally Determined Contributions (NDC) it
formulated in accordance with the Paris Agreement, the government has announced that it
will promote the development of renewable energy as part of its measures to reducegreenhouse gas emissions. As described above, it is striving to bolster the power supplycapabilities and at the same time is promoting diversification of power sources in thecountry in concrete terms as part of its policy. The Project, which aims at increasing thecountry’s power supply capabilities, diversifying its power sources, and furthermore
supporting efforts to mitigate climate change by constructing a large-scale photovoltaic
power station in the province of Kampong Chhnang, close to Phnom Penh, which has highdemand and a large amount of solar radiation, is consistent with the policy of theCambodian government.
(2) Relevance to Japan’s and JICA’s Assistance Policies
The Government of Japan’s Development Cooperation Policy for the Kingdom ofCambodia (July 2017) defines support for industrial promotion as one of the priority sectors
and it would work to develop a stable power supply system, an important element ofoverseas direct investment promotion. Furthermore, in the JICA's Country Analysis Paperfor Cambodia (March 2014) states that it is necessary to consider a future power source
structure taking measures to cope with power shortages in the dry season into account.
This is because hydroelectric power generation represents half of the electricity generated
in the country, and the Project is consistent with these policies and analysis. In the Phnom
Penh Transmission and Distribution Expansion Project (ODA loan) and its Phase 2 (ODAloan), JICA provided support to contribute to stable power supply through the developmentof power transmission, distribution, and transformation equipment. In addition, it isconsidered that the Project encourages green investments by business operators in theASEAN region, contributing to the ASEAN overseas investment and finance initiatives
announced by Prime Minister Shinzo Abe at the Japan-ASEAN summit meeting inNovember 2019, as well as from the perspective of stimulating independent development
making the most of domestic energy resources, it contributes to the pursuit of economic
prosperity in the Free and Open Indo-Pacific strategy.
2. Necessity of Assistance with Private-Sector Investment Finance
The Project is a photovoltaic IPP project, for which there are only a small number ofprecedents in Cambodia, and it is expected to act as a catalyst for similar projects byprivate business operators in the years to come. On the other hand, since it is difficult forordinary financial institutions to grant long-term loans using the project finance methodbecause this project involves a risk of the EDC performing power purchase agreements,
the necessity of providing assistance through the Private-Sector Investment Finance ishigh.
3. Project Description(1) Project Objective
The Project is designed to help meet the brisk power demand in the Kingdom ofCambodia with renewables by constructing photovoltaic power stations there.
(2) Project Site / Target Area
Province of Kampong Chhnang, Kingdom of Cambodia(3) Project Components
Construction and operation of a photovoltaic power station (rated capacity: 60 MW) andpower transmission and distribution equipment and other facilities. In accordance withthe 20-year Power Purchase Agreement (PPA) with the Borrower, the EDC has the dutyof purchasing all of the electricity generated.
(4) Estimated Project Cost
43.6 million U.S. dollars (including the 4.1 million U.S. dollars loaned by JICA)(4) Schedule
September 2021: Construction initiatedOctober 2022: Construction completed(5) Project Implementation Structure1) Borrower: Prime Road Alternative (Cambodia) Company Limited
2) Executing Agency: Same as above3) Operation and Maintenance System: Outsourced to CACS Engineering and Uper
Energy Singapore by concluding O&M agreements with the two firms(6) Cooperation and Sharing of Roles with Other Donors
1) Japan’s Assistance Activities
The ODA loan-based Phnom Penh Transmission and Distribution Expansion Project(L/A signed in July 2014; 6.48 billion yen), ODA loan-based Phnom Penh
Transmission and Distribution Expansion Project (Phase 2) (L/A signed in May 2018;
9.216 billion yen), etc.
2) Other Donors’ Assistance Activities
The ADB already has experience in financing a 10 MW photovoltaic power generation
project by a private power generator in Cambodia. Based on this experience, in orderto promote photovoltaic power generation projects in Cambodia’s electricity sector
using the IPP bidding method, the ADB provided the EDC with bidding support
advisory services, including a feasibility study for this project, as part of its technicalcooperation (Office of Public-Private Partnership at the ADB). The ADB also grantedsovereign loans for the construction by the Cambodian government of powertransmission lines that connected this project area and grids (the ADB’s regionaldepartment). Thus, the Bank has provided comprehensive support to realize thisproject, which is the largest-ever photovoltaic power generation undertaking by thesuccessful IPP bidder.
(7) Environmental and Social Consideration / Cross-Sectoral Issues / Gender Category
1) Environmental and Social Consideration(i) Category: B(ii) Reason for Categorization: The Project’s potential adverse impacts on theenvironment are deemed insignificant as defined by the JICA Guidelines forEnvironmental and Social Considerations of April 2010 (“the JICA Guidelines”), interms of sector description, project description, and site description.
(iii) Environmental Permit: The permit was obtained after the completion of anenvironmental impact assessment (EIA) as required by Cambodia’s relevant laws.
(iv) Anti-Pollution Measures: The Project will take measures to mitigate the impacts on
air quality, water quality, noise levels, and solid waste during construction and whenin operation so as to meet domestic and international environmental standards.
(v) Natural Environment: The project area is not situated in or near any sensitive areas
such as a national park. Therefore, the adverse impact on the natural environment isexpected to be minimal.
(vi) Social Environment:
The Project will involve acquiring approximately 95 ha of land. This acquisition will
be implemented through negotiations in line with Cambodian laws and the JICA
Guidelines, and therefore, there will be no involuntary resettlement. Land acquisition
will be undertaken by the EDC, and the acquired land will be leased to the Borrower.
No particular opposition was raised against the implementation of the Project in thepublic consultation process.
(vii) Other/Monitoring: The sponsor, Project Implementation Consultant Services (PIC),
as well as the EPC and O&M contractors will monitor the impact on air quality, noiselevels, water quality, and solid waste during construction and when in operationaccording to the environmental monitoring plan.
2) Cross-Sectional Matters: By constructing and operating a photovoltaic power station,
this project aims at promoting the spread of renewable energy and diversification ofpower sources in Cambodia, thus contributing to mitigating the effects of climate change.
3) Category of Gender: GI (Gender mainstreaming needs assessment and analysis
project)
Reason for Categorization: Although gender mainstreaming needs were confirmed in theappraisal process, the Project stopped short of including any specific activity that would
contribute to gender equality or women’s empowerment.
4) Other Important Issues: None in particular
4. Targeted Outcomes(1) Quantitative Effects
Co2 emission reductions(ton/year) will be measured
Indicator

Baseline

Target (2 years after loan
disbursement completion)

Maximum output (MW)060 (MW)(2) Qualitative Effects
Promotion of photovoltaic power generation, mitigation of effects of climate change, andsustained economic development in Cambodia
5. Lessons Learned from Past Projects(1) Evaluation Findings of Similar Past Projects
The ex-post evaluation of a similar project in Mongolia notes that aging grid facilities andthe failure to meet surging demand resulted in an inadequate capacity of the existing
facilities after connecting to the Central Energy System, temporarily affecting powertransmissions. The lesson learned for future projects is that it will be useful to analyze thegrid capacity in a feasibility study or the like and take such analyses into account inaccessing project feasibility.
(2) Lessons for the Project:
It has been decided that the Project will examine the capacities of power plants that will beconnected to the local grids in the future and the installed capacity of these grids, with thehelp of the technical advisor as necessary. It has also been found that the grids have thecapacity to receive power from not only the wind farms to be constructed under the Project
but also neighboring power plants.
6. Evaluation Results
The Project is relevant to some of the issues facing Cambodia as well as the country’s
development policies. It is also consistent with Japan’s and JICA’s assistance policies.
Additionally, the Project will contribute to three of the SDGs: Goal 7 (clean energy), Goal 13(climate action), and Goal 17 (partnership). Therefore, it is highly necessary for JICA tosupport the implementation of the Project.
8. Plan for Future Evaluation(1) Indicators to be Used
As shown in Section 4 of this evaluation sheet.
(2) Timing:
An ex-post evaluation will be conducted two years after loan disbursement completion.
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