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2 ASIA HAND Cambodia's coming energy
bonanza By Shawn W Crispin
undisclosed discussions with senior
members of Hun Sen's ruling Cambodian People's
Party (CPP).
Yet there's also a potential
Cold War twist to China's bid. Any future
oil-and-gas-production agreements with the CPP-led
government will likely need to pass through
Sokimex, Cambodia's leading conglomerate, which
through a joint venture with Tela Petroleum Group
controls 80% of the country's domestic oil
and
gas
distribution. The politically connected company
also maintains significant holdings in hotels and
maintains monopoly rights to ticket sales for the
Angkor Wat ruins, the country's chief
money-spinning tourist destination.
Sokimex is majority-owned by ethnic
Vietnamese Sok Kong, former president of the Phnom
Penh Chamber of Commerce and a longtime friend of
Hun Sen, according to a researcher conducting due
diligence on the company. Although today Hun Sen
is clearly Cambodia's most dominant politician,
there are still lingering questions about his ties
to Vietnam, which first put him in power after
invading the country and ousting the Khmer Rouge
regime in 1979.
A controversial border
treaty Hun Sen signed with Vietnam in 2005 raised
allegations that his government ceded too much
Cambodian territory to Hanoi - charges the feisty
prime minister countered by jailing journalists
and activists. Energy analysts note that
Cambodia's newfound reserves coincide with the
expectation that Vietnam's own diminishing fuel
supplies will run out over the next decade. So far
Hanoi has no plans on how it might fill this
future energy gap.
And while it is
unlikely that Vietnam has enough political clout
left in Phnom Penh to override Beijing's bid for
majority access to Cambodia's reserves, the
enduring Cold War relationship could materially
affect how the oil and gas are divvied up among
its energy-starved regional neighbors.
Crude comparisons What is more
likely is that senior CPP officials have designs
on building up Sokimex and perhaps also Tela
Petroleum through lucrative state energy
concessions, which, once converted into
foreign-currency earnings, may be tapped to
support its patronage-based political machine and
further consolidate the party's dominance over
Cambodian politics - akin to how Malaysia's ruling
United Malays National Organization has relied on
state oil giant Petronas for its own political
purposes.
The political opposition has
already lodged price-gouging allegations against
the two politically connected energy companies,
which to date are still net oil and gas importers.
The Sam Rainsy Party complained last year that
domestic retail oil prices failed to fall in line
with declining global oil prices, which fell by
about 25% between mid-July and November last year.
They have also publicly accused the two companies
of tax and customs-duty evasion on imported
petroleum products.
Western donors have
already sounded warnings about the potential
pitfalls of Cambodia's supposed newfound energy
wealth. For instance, the World Bank has pointedly
compared Cambodia's situation to that of oil-rich
Nigeria, where corrupt politicians have pilfered
billions of dollars' worth of oil revenues and
where local versus national claims to resources
have recently degenerated into civil war. Thirty
years and thousands of drained oil wells after
Nigeria's oil boom began, it is still one of the
world's most impoverished countries.
Hun
Sen's government has come under intense donor
pressure to tackle endemic corruption among his
ranks, which in recent years has reached such
outrageous proportions that donors have threatened
to withhold future aid disbursements without
demonstrable progress in curbing graft. Global
corruption watchdog Transparency International
said in a recent study that "corruption pervaded
almost every sector of the country" and that
"those in power have little reason to change a
system that has secured them much power and
personal wealth".
If recent projections
are realized and energy revenues start flowing in
2009, the pie is set to grow substantially. And
Hun Sen's government, which currently relies on
foreign aid for about 60% of its working budget,
will very soon neither be dependent on Western aid
for its economic sustenance, nor particularly
motivated to change its corrupt ways as suggested
by finger-wagging Westerners.
Cambodian
officials have already promised to funnel future
energy receipts into rebuilding the country's
shattered infrastructure, including hospitals and
schools. Judging by the status quo, however, any
hopes that Cambodia's incipient energy bonanza
will substantially trickle down to the 35% of the
population mired in poverty will likely prove more
pipe dreams than political reality.
Shawn W Crispin is Asia Times
Online's Southeast Asia editor.
(Copyright 2007 Asia Times Online Ltd. All
rights reserved. Please contact us about sales, syndication and republishing.)
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