No More ADB Funding to Finish Stalled Railway Project

By: Zsombor Peter , The Cambodia Daily, | March 11, 2015

Visiting Asian Development Bank (ADB) President Takehiko Nakao said Tuesday that no more money would be forthcoming from the bank to complete a stalled and bankrupt project to rehabilitate Cambodia’s old railway lines, a $142 million effort that had been billed as a key infrastructure initiative.

The ADB has put up most of the money for the work. And while the southern line from Phnom Penh to Sihanoukville is up and running, most of the work on the much longer stretch between the capital and Poipet City on the Thai border remains undone. At least $75 million is estimated to be needed to finish the line.

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Asian Development Bank President Takehiko Nakao, left, speaks during a press conference at the Bank’s office in Phnom Penh on Tuesday. (Siv Channa/The Cambodia Daily)

But at a press conference in Phnom Penh on Tuesday, Mr. Nakao said the money would not come from the ADB.

“The remaining part of our finance…will be used for taking care of the existing railway, the southern part and the completed part of the northern line,” he said. “That is the present state.”

Mr. Nakao said he was not aware of any plans the government might have for completing the work with other funds and that the project was not discussed during his meetings earlier in the day with Prime Minister Hun Sen and other officials.

In December, the ADB unveiled a five-year loan plan for Cambodia worth $800 million, including $148 million for trade and transportation projects. ADB country director Eric Sidgwick, who joined Tuesday’s press conference, said none of it would be spent on finishing the railway project—because the government had not asked.

“We have not received a request from the government,” Mr. Sidgwick said. “So when you see the transport pipeline, $148 million for that, these are for projects that have already been discussed with the government and there is government demand for these projects. So as of now, we have not received a request for that.”

The railway project has come under heavy rebuke from rights groups over the 4,000 families who have lost all or part of their land along the tracks to make way for the upgrade.

After commissioning an independent assessment, the ADB last year admitted to making major mistakes in designing and carrying out the project, mistakes that made the families who lost land worse off—a breach of bank policy. Under a government-approved aid plan, the families are in line to receive additional compensation to make up for their losses.

Mr. Nakao, who is scheduled to leave Cambodia Wednesday, said the ADB was still deciding how to provide the additional compensation.

One option the bank is considering, also criticized by rights groups, is to provide more microfinance loans to families forced to take on new debt because of their evictions.