China poaches airport contract

The government has commissioned a Chinese consortium to build a new international airport for Siem Reap and formed a committee to determine how to compensate the French company that operates the city’s existing airport for prematurely ending its concession licence, according to documents obtained yesterday.

Under the deal, Chinese state-run Yunnan Investment Holdings Ltd (YIHL) will build a new $880 million airport about 50 kilometres outside Siem Reap’s provincial capital in Sonikum district.

The agreement, signed by Cambodian Deputy Prime Minister Sok An and YIHL chairman Sun Yun during Chinese President Xi Jinping’s visit to the Kingdom in October, grants a joint investment consortium formed by YIHL, the Yunnan Construction Investment Group and the Yunnan Airport Group an exclusive 55-year build, operate, transfer (BOT) concession on the new airport.

Construction of the greenfield airport on 700 hectares of land provided by the government is expected to take three years, according to Chinese media sources. The plan is to build a 4E class airport, with the possibility of expanding to 4F compliance, which means the airport could receive larger long-haul aircraft.

Once operational, YIHL’s Siem Reap Angkor International Airport would replace the existing airport at Siem Reap operated by Cambodia Airports, a company majority owned by France’s Vinci Group.

Cambodia Airports currently holds a concession to operate the international airports serving Phnom Penh, Siem Reap and Sihanoukville until 2040. The company recently sunk $100 million into expanding the terminals at the Phnom Penh and Siem Reap airports, which is expected to increase each airport’s capacity to handle up to 5 million passengers annually.

According to a government decree signed by Prime Minister Hun Sen on November 1 and obtained by The Post yesterday, the premier has appointed an eight-person committee to negotiate a sooner end-date for Cambodia Airport’s franchise on Siem Reap’s airport and to discuss suitable compensation for the company.

“The committee must negotiate with Cambodia Airports in order to terminate the contract before the concession agreement ends and cease operations and development of the current Siem Reap airport,” it read.

“The committee will arrange the negotiations with Cambodia Airports in order to handle the compensation for the termination of the contract according to Article 7 of the concession agreement.”

Yim Nola, the senior minister of the Cambodian government who heads the newly formed committee, claimed both the government and Cambodia Airports had agreed to include Article 7 in the initial concession agreement when it was signed. He said the article gives the government the right to relocate the airport provided Cambodia Airports receives compensation.

He said Cambodia Airports had already been informed of the decision to amend the contract, though a date for the negotiations had not yet been set.

“We informed Cambodia Airports to prepare for the negotiations and requested they calculate the size of their investment in the Siem Reap airport and evaluate its current value,” he said.

“The new Chinese company will be responsible for paying the agreed compensation amount, though it will not be disbursed until the new airport starts operations.”

According to another official who is a member of the committee, speaking on condition of anonymity, the government decided to relocate Siem Reap’s airport after a report issued by UNESCO in 2010 said the current airport was located too close to Angkor Wat and Bayon temples.

The report warned that vibrations from aircraft taking off and landing at the airport were damaging the foundations of the temples in the World Heritage Site.

Cambodia Airports declined to comment on the specifics of the government’s plan to prematurely terminate its concession on Siem Reap airport when contacted yesterday. Norinda Khek, its spokesman, said briefly, “We are confident that exchanges with Cambodian authorities will deliver constructive outcomes.”

This is not the first time Cambodia Airports has seen its concession contract challenged.

In 2010, the Council for the Development of Cambodia (CDC) approved a South Korean company’s plan to build a new international airport for Siem Reap.

NSIA Company, a joint venture of Camko Airport Company and Lees A&A Company, pledged to invest $1 billion in the alternate facility, also to be located in Sonikum district, but the project never got off the ground.

Earlier this year, government officials unveiled a plan to halt future expansion on Phnom Penh International Airport and build a new airport to serve the capital on land 30 to 40 kilometres outside the city. Construction on the airport was slated to begin by 2020 and take five years to complete.