More Bids Than Expected at Cambodia’s 40 MW Solar tender

On 17 February, EDC has received 14 bids, at the tender for Phase 2 of the National Solar Park project which is more than generally expected. Phase 2 comprises a 40MW solar project in the Cambodian province of Kampong Chhnang, a few hours driving from the capital Phnom Penh On 1 December 2020, Cambodia’s public utility the Electricité du Cambodge (“EDC”) launched a tender for the second phase of its National Solar Park project. The first phase, 60MW, had been won by Prime Road Alternative of Thailand after a competitive tender in 2019. Bids for the second, 40 MW phase were due today on 17 February 2021. The National Solar Park is an Asian Development Bank (“ADB”) supported project. Going back to 2018, feasibility and environmental studies have been made in preparation of the project.

Due to the corona virus and partially to the very low tariff realized after the Phase 1 tender, it was widely expected that interest in the tender would be less compared to the Phase 1. At Phase 1 in 2019, 140 RFP’s were purchased by interested parties and finally 29 bids were submitted. Now, for Phase 2, a far lower number of 49 RFPs have been purchased prior to the bid. Nevertheless, EDC was able to receive 14 bids for the solar project. There were three bidders submitted the Bid to EDC before 17 February and another 11 bidders submitted the bid document just hours before the bid opening started.

The EDC has not released the full list of bidders, but VDB Loi believes that several of the bidders who played an important role in 2019, have bid again, including the Phase 1 winner, Prime Road. Of the bids received, about half are from Chinese bidders or consortia, four are from bidders based in or originating from South-East Asia, and a small number are bidders from Europe.

VDB Loi’s own Edwin Vanderbruggen had predicted that “there will be more than 10 qualifying bids”.

My Prediction

[Written by Edwin on 5 January 2021] – What Is Different About Cambodia’s New Solar Project Tender?

This will be a heavily fought battle. I predict there will be more than 10 qualifying bids received by EDC for this 40 MW project, only slightly dampened by the holiday periods in “the West”. More than half of these will be strong bids from Chinese companies. Spurred on by increased optimism with a vaccine on the horizon, and enticed by a well prepared, land-ready project with a bankable PPA and without a major foreign exchange risk, I expect bidders will try to reach or stay close to a target of 4 US$ cents, or somewhat above. A few bidders will be able to go well below this magic threshold number while still making money, and chances are they will walk away with Phase II.

The project is situated on up to 60 ha of land as a long-term lease from EDC, the utility and off-taker. The PPA is for 20 year. The RFP spelled out that the tariff is the main biddable term, cannot exceed 7.6 US$ cents/kWh;

It is fixed for 20 year, no escalation. The bid requires a bid bond of US$300,000. There was no separate pre-qualification round, but qualification conditions are provided and were met as “Envelope I” of the bids.

Today, the EDC started the process by going through all the names of the submitted bidders followed by an opening remark by the bid EDC’s representative (Dr. PRAING CHULASA) and ADB’s representatives. EDC then began opening all of the submitted bidding documents within the presence of each company’s representative publicly to confirm the completeness of the submitted biding documents. Afterwards, to ensure the safety of the bidding documents, each of the attended committee members (which is EDC, Ministry of Mine and Energy, and Ministry of Economy and Finance) placed their signatures on all 14 originals Financial Envelope and such envelopes were kept together in a safety box for the second bid opening. To end the bid opening ceremony, ADB had prepared a presentation to briefly explain the bid evaluation process to the participants. VDB Loi attended the proceedings.

For the next step, EDC will study all of the bidders’ Pre-Qualification envelope, which according to EDC, shall take approximately a month. Once EDC is done with the evaluation, the qualified bidders shall be invited for second bid opening ceremony with the date and place to be determined.

From ADB’s estimation, the winner of the bid is expected to be announced within the next 3 months.