World Bank Grants $70 Million in Aid to Cambodia

Tuesday August 14, 12:29 pm ET

PHNOM PENH, Cambodia (AP) -- The World Bank said Tuesday it will give $70 million to Cambodia to help reduce its widespread poverty in a package that includes a plan to import cheap electricity from the country's neighbors.

Some $18.5 million will be used to build cross-border transmission lines to Laos and Vietnam to import electricity to Cambodia, the bank said in a statement Tuesday. The project is expected to be completed by August 2011.

The new power lines will connect Kampong Cham province in the east with Vietnam, and Stung Treng province in the northeast with Laos, the bank said in June. The two provinces now have some of highest electricity rates in the world.

Customers in the provinces pay up to 30 cents per kilowatt-hour of electricity. The tariffs are expected to drop to between 10 cents to 15 cents per kilowatt-hour once the transmission lines are operational, the bank said.

The remaining money in the aid package will be used for projects supporting development of the private sector, public financial management, good governance, natural resource management and decentralization of local government, the statement said.

The funds will help "build stronger institutions of governance that will lead to higher growth and faster poverty reduction," Ian Porter, the bank's country director for Cambodia, said in the statement.

Cambodia has achieved double-digit economic growth during the last three years but still remains one of the world's poorest nations.

Donors in June pledged $689 million in aid for Cambodia after rapping the government of Prime Minister Hun Sen for failure to combat corruption. The World Bank statement did not say whether the new aid is part of the earlier pledge.

Fraud and corruption in the procurement process led the World Bank in June 2006 to freeze $7.6 million in funding for several projects in Cambodia. Hun Sen angrily said there was no proof of wrongdoing.

Early this year, the bank lifted the suspensions after it agreed with the government on new frameworks for improving implementation of the projects.