CDB provides $1.1 billion loan for Techo International Airport Construction Project

CDB provides $1.1 billion loan for Techo International Airport Construction Project On January 11, 2018, China Development Bank and the Overseas Cambodian Investment Corporation (OCIC) signed a ‘Project Loan Cooperation Framework Agreement’ for the construction for a new 6,500-acre airport, 18 miles south of the capital Phnom Penh (or 金边新国际机场).

China Development Bank and Cambodia Airport Investment Co Ltd (CAIC) — a special purpose vehicle and joint venture between OCIC (90% ownership stake) and the Cambodian Government's State Secretariat of Civil Aviation (SSCA) (10% ownership stake) — signed a $1.1 billion loan agreement for the Techo International Airport Construction Project.

However, it is known that the project was implemented on a public-private partnership (PPP) basis and financed according to an 73:27 debt-to-equity ratio. The original estimated project cost was $1.5 billion.

CDB was expected to provide $1.1 billion of debt financing, while OCIC and SSCA were expected to provide equity contributions worth $280 million and $120 million, respectively. However, due to cost overruns, the actual cost of the project was approximately $2 billion.

The purpose of the project was to construct a new airport in Kandal province’s Kandal Steung district, about 30 km south of Phnom Penh. The current Phnom Penh International Airport is about 400 hectares and is located 18 km from the new airport site.

Upon completion, it was expected that the new airport (‘Techo International Airport’) would be able to accommodate 27 million passengers by 2030, and up to 30 million by 2050.

Shanghai Baoye Group — a subsidiary of Metallurgical Corporation of China — and China State Construction Engineering were the EPC contractors responsible for project implementation. Foster and Partners, a British architectural firm, was responsible for project design. The project formally entered implementation on December 16, 2019.

However construction did not begin until December 28, 2019. As of May 2021, the project had achieved a 40% completion rate. It was originally expected to reach completion in July 2022. However, it not ultimately reach completion until September 9, 2025. The Techo International Airport Construction Project has been the subject of local controversy and resistance.

On February 19, 2018, over 200 people from four communes gathered at Kandal Provincial Hall to voice their complaints regarding land earmarked for the new airport and seek resolution of the land dispute.

A woman said she was one of several villagers who had sold land but been underpaid, selling it for $250 per hectare but receiving a fraction this amount, just $25 or $50.

She said they had been intimidated during negotiation over the land, that representatives of the company had slammed the table in front of them, threatened them, locked the door and called the police.

On April 10, 2018, 200 people representing 2,000 families gathered outside Kandal Steung district hall requesting intervention in the land dispute over a 400 hectare area, a representative said unidentified companies had cleared and begun marking parts of their communal land. Another protest against the airport and adjoining development was held on April 25, 2018.

Hundreds of villagers participated and said that excavators were encroaching on communally held wetlands. A representative for the villagers said that 1,000 families had submitted claims to land affected by the development.

On May 4, 2018 hundreds of villagers from the Ampov Prey commune protested against Chanheng’s company, Heng Development, and about five other companies laying claim to their land.

About 1,200 families thumb-printed a document asking district officials for fair compensation for land that is likely to be encompassed in the project, and the loss of their livelihoods from farming and fishing. Many of them had lived on the land since the mid-1990s.

On June 6, 2018 about 800 people representing over 2,000 families gathered at Kandal Provincial Hall to file a complaint against multiple private companies, including Heng Development, operating in their commune, clearing land despite their complaints.

The complaint stated that they would escalate protest if their demands are not met, occupying the land and holding rallies at the national level. The land dispute pre-dates announcement of the airport and ‘airport city’ project.

In 2005, Chenheng's men began bulldozing land occupied by nearly 300 families, whose ownership appeared legitimate on the basis of a 2001 law that people living peacefully on uncontested land for five years can lay claim to it. In 2006-7 the Kandal Provincial Court upheld their claim to the land. Some families were issued with temporary land titles, but not the official land titles that they were assured of.

Chanheng's company began clearing the land again in 2009, bulldozing farms and a temple. Company security guards and Military Police fired on villagers who came to protest, wounding three of them.

In 2010 ten villagers attempting to block bulldozers from destroying their ripening rice crops were arrested and charged with land grabbing and incitement in connection with the protests, a move decried as harassment by human rights organizations.

As land disputes erupt again in the wake of the planned new airport, with villagers fearing they will be stripped of their land and evicted, human rights groups argued that development on the land should cease until land disputes are resolved.

Vann Sopathi, business and human rights coordinator for the Cambodian Center for Human Rights, said that government and developers should conduct a social and environmental impact assessment of the airport project, and that it should not be permitted to proceed until a mutually acceptable solution is agreed between the company and the affected people.

In late 2018, more than 2,000 families reportedly accepted $100 each in compensation for losing 400 hectares of the community lake but others refused the offer saying that the amount was too little for such valuable land.

On May 6, 2019 about 400 villagers protested outside the Kandal Stung district hall seeking compensation for communal land they said was sold to house the new Phnom Penh airport, without their knowledge.

A representative of the villagers, Phok Phanny, said that 83 hectares of land in the Ampov Prey commune, belonging to a ‘solidarity group’ dating back to the 1980s, had been set aside divided into parts for farming, forest and as a communal lake.

A company, named by the district governor in previous reports as Seang Chanheng’s Heng Corporation, also claimed ownership of the land. Villagers said that after the announcement of the new airport in early 2018 the company had sold the land to OCIC.

Another protesting villager, Yem Yat, said that authorities had demarcated the land in question for communal use in 1984.

Yat said: “We are protesting at the district hall and want the district authorities to intervene with the company to find a solution for the people…The land belonged to the people, and did not belong to a businessperson.” In December 2019, Chairman of OCIC, Pung Kheav Se, said construction of the new airport was on schedule.

He said the foundations of the airport were being built, an environmental impact assessment was being conducted and negotiations with people affected by construction were underway.