Japanese lender Mizuho Bank Ltd will provide a $55 million loan to refinance a project for power transmission line operator Cambodian Transmission Ltd (CTL), it said in a press release on Wednesday.

The loan is the bank’s first project finance deal in Cambodia and is co-financed with Amsterdam-headquartered ING Bank NV, it said.

The project will link two substations located in northern Phnom Penh and in Kampong Cham province, via a 100km double circuit 230 kV overhead transmission line, to meet rising electricity demand in the capital and surrounding areas.

“Cambodia’s economic development has led to a rise in demand for a stable power supply, and the energy sector is now a key area in terms of economic policy,” it said.

The two banks signed a contract on March 12 on the 10-year loan with CTL.

CTL, a wholly owned subsidiary of Malaysia’s HNG Capital Sdn Bhd, launched a project to transmit power to the Phnom Penh metropolitan area under a 25-year contract it signed with state-run electric power company Electricite du Cambodge in August 2013.

“Our new loan refinancing the project is co-financed with ING Bank NV and is backed by a 10-year extended political risk guarantee from the World Bank Group’s Multilateral Investment Guarantee Agency [Miga], in addition to a guarantee from the government of Cambodia over the life of the project.

“This is also Miga’s first guarantee in Cambodia. With this project finance deal, we aim to promote future diversification of capital from international finance markets for Cambodia’s energy sector,” it said.

Ministry of Mines and Energy spokesman Victor Jona previously said electricity demand is growing at an average of 16-18 per cent annually, although it soared 25 per cent last year from 2018.

Cambodia can currently generate about 70 to 80 per cent of total domestic electricity consumption, he said.

The Kingdom produced 11.261GWh of electricity last year, up 21 per cent from 2018’s 9.427GWh, said a ministry report.