News / MegaProject 1095: US$1.8 billion expressway PPP in Cambodia reaches commercial close

MegaProject 1095: US$1.8 billion expressway PPP in Cambodia reaches commercial close

🕔 February 1, 2018
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China Road and Bridge Corporation (CRBC) have signed the concession agreement for a $1.8 billion public-private partnership (PPP) development of a 190km expressway in Cambodia. The expressway will link Cambodia’s capital, Phnom Penh, to Sihanoukville, site of the nation’s only deep-sea port, in the south-west of the country.

The project will be developed under a build, operate, transfer (BOT) framework. Construction is anticipated to begin in the summer of 2019 and take four years to complete.

An exact start-date has not been set as an inter-ministerial group is currently studying the impact of the project on private property and homes along its length. It has been speculated that the compensation package for affected landowners and residents will be massive and will not be covered by the Chinese government.

CRBC is a subsidiary of China Communications Construction Company (CCCC). The Cambodian government signed a draft concession agreement for the project with CCCC last year.

The new expressway will have at least two lanes in each direction and an average width of 24 metres. Users will have to pay toll charges. It will offer a shorter and faster route between Phnom Penh and Sihanoukville than the existing two-lane 230km National Road 4. The expressway’s flyovers will also remove 10 road intersections, reducing both traffic delays and the risk of road accidents.

National Road 4 will not be dismantled. Most of the new toll expressway will be built to its east.

The project has been in development for many years. In April 2014, the Vice-president of CRBC stated publicly that the company had studied the project a few years before and delivered a report to the Cambodian government requesting a BOT framework. 

In 2014, the government of Cambodia created a master plan for expressway development. It projected that Cambodia will need 850km of expressways by 2020 at a cost of US$9 billion. The necessity of this development was highlighted in 2015, when Phnom Penh authorities announced that congestion in the capital was costing the country approximately US$6 million per month.

The expressway is also a key project in China’s One Belt, One Road (OBOR) initiative. This involves the creation of a network of railways, roads, pipelines, and utility grids that would link China and Central Asia, West Asia, and parts of South Asia, proposed by China's president Xi Jinping in 2013 - the world’s largest platform for economic cooperation.

The State Council authorized an OBOR action plan in 2015. More than 60 countries have expressed interest in participating.

CRBC has been advised throughout the transaction by Hunton & Williams LLP.



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