Land-grabber Lao Meng Khin's coal-fired power plant to be approved without transparency

LAND-GRABBERS: Lao Meng Khin (R) and Choeung Sopheap (C)

Power play at Assembly

Thursday, 16 June 2011
Thomas Miller
The Phnom Penh Post

The National Assembly is set to discuss today whether to approve guaranteed payments for electricity, potentially worth millions of dollars, which will be generated from a coal-fired power plant in Preah Sihanouk province constructed by a company owned by ruling party Senator Lao Meng Khin.

Observers said the deal represented yet another example of the ruling oligarchy close to Prime Minister Hun Sen enriching itself via state coffers.

The Ministry of Economy and Finance has submitted a proposed guarantee of payments agreement to the National Assembly for approval.

The proposal, a February 9 copy of which was obtained by The Post yesterday, reveals that state power company Electricité du Cambodge entered into a power-purchase agreement with a firm known as Cambodia International Investment Development Group Co Ltd on January 6.

The Ministry of Economy and Finance is asking the National Assembly to ratify the agreement, which would “irrevocably and unconditionally” guarantee that the government would pay any debts owed to the company.

Chiv Bunly, an assistant to Lao Meng Khin’s son, Lao Vann, confirmed yesterday that CIIDG is in fact owned by the senator. He did not know, however, how much the company will make on the Preah Sihanouk plant.

In December, Hun Sen signed off on an agreement during a trip to China that approved a joint venture between a Chinese company and CIIDG to build the US$362 million power plant, which has an expected capacity of 270 megawatts.

Cambodia International Development Group Co Ltd, the joint venture company, was granted a 33-year concession to build and operate the plant starting this year.

Lao Meng Khin and CIIDG are also involved in the 133-hectare real estate development at Boeung Kak lake in Phnom Penh, which has attracted international condemnation and is set to displace more than 4,000 families who have so far been short-changed of adequate compensation.

In 2007, local developer Shukaku Inc, also run by the senator, was granted a 99-year lease at Boeung Kak. Shukaku established a joint venture with Chinese-owned Inner Mongolia Erdos Hung Jun Investment Co last year, according to an official letter that Phnom Penh Governor Kep Chuktema wrote to Hun Sen, who later signed off on the agreement.

Son Soubert, a former member of the Constitutional Council, said yesterday he believed it was “illegal” for Lao Meng Khin to be involved in such business ventures as a senator.

“I can’t understand how they can do that,” he said. “A senator, like the member of the National Assembly, cannot deal with business at the same time.”

Ou Virak, president of the Cambodian Centre for Human Rights, said the fact that Lao Meng Khin was involved in yet another costly development scheme was “basically expected”, calling him “one of the few close allies of the ruling elites who will be involved in all of these deals”.

Lao Meng Khin’s wife, Choeung Sopheap, owns Pheapimex Group, which has numerous assets including a 315,028-hectare concession in Pursat and Kampong Chhnang provinces.

“The reality is that most of these people create these contracts and agreements so they can sell them to another company. Same thing with Boeung Kak ... The senator’s job is to broker a deal and he gets a big amount of money for doing that,” Ou Virak said.

The proposal sent to lawmakers for the Preah Sihanouk power plant does not specify at what price or quantity electricity will be purchased, though the deal is likely worth millions of dollars.

Sam Rainsy Party parliamentarian Mu Sochua said lawmakers were being used as a “rubber stamp” to approve a “sweetheart deal”, noting that she had seen neither the terms of the agreement between the government and CIIDG nor an environmental impact assessment.

“The fact that they come to the National Assembly without even giving us the contract that they signed … it is a total abuse of power from the executive branch, and it’s a total manipulation,” she said. “How can we accept this?”

Mu Sochua said numerous questions remained about the project, ranging from the unspecified costs for the Cambodian public to the impact a coal-fired power plant might have on the environment in the tourist hub of Sihanoukville.

“Until we can see that it is a transparent bidding system, the contract is available, we know exactly who is behind it... it’s more or less a secret and then we are used, the National Assembly is used as a rubber stamp,” she said.

Ou Virak said the lack of information about the project and the abuse of parliament was “a great indicator in what the role of the National Assembly is”.

“This is normal. Everything is in secrecy,” he said. “If we hired 123 people to just rubber stamp, we don’t need to pay them that much.”

Pan Sorasak, secretary of state at the Ministry of Commerce, declined to comment yesterday. Sok Chenda, head of the Council for the Development of Cambodia, could not be reached.

ADDITIONAL REPORTING BY SAM RITH