Cambodia resolves Phnom Penh airport tensions with new rights grant
France’s Vinci to operate capital’s new Chinese-built international gateway
The Cambodian government has quietly defused tensions with France’s Vinci over the erosion of its aviation monopoly in Phnom Penh by granting the company rights to manage the city’s new Chinese-built international airport, due to open next year.
Through a joint venture, the French company took over the running of Phnom Penh International Airport in 1995 and then subsequently also assumed control over airports in Siem Reap and Sihanoukville. While Vinci’s operating rights in the three cities had been set to run through 2040, deals that the Cambodian government reached in recent years with Chinese state companies for the building of new airports looked set to break the French company’s monopoly.
However, Khek Norinda, a spokesperson for Cambodia Airports, Vinci’s local joint venture, told Nikkei Asia that the unit signed a memorandum of agreement with the government in April giving it rights to operate the new Techo Takhmao International Airport being built outside Phnom Penh, but he declined to provide further details. Vinci owns 70% of Cambodia Airports in partnership with a joint venture between Malaysia’s Muhibbah Engineering and local businessmen.
A senior Cambodian official confirmed the Techo Takhmao deal, saying Cambodia Airports will operate the new airport in cooperation with an unidentified company but that details are still being negotiated. The current Phnom Penh airport adjoins Pochentong Air Base.
“We will have to close the Pochentong airport, so Vinci will have to move to the new airport,” the official told Nikkei. “There is no way to open the Pochentong airport and the new Techo Takhmao International Airport at the same time.”
Had Vinci failed to work out a deal with Phnom Penh, it would likely have raised legal challenges over the launch of commercial flights at Techo Takhmao, a regional aviation industry veteran said.
Cambodia Airports has been completely cut out in Siem Reap, the gateway to Angkor Wat, where it ran the local airport for 22 years. Last year, a consortium of state-owned companies from China’s Yunnan province opened the new $1 billion Siem Reap-Angkor International Airport under a 55-year build-operate-transfer agreement.
Following the closure of the city’s old airport, Cambodia Airports received $64 million in compensation from the government for the premature loss of its operating rights, according to Muhibbah Engineering’s annual report.
Vinci’s agreement to operate Phnom Penh’s new airport emerged weeks after French President Emmanuel Macron warmly welcomed Cambodian Prime Minister Hun Manet to the Elysee Palace in Paris.
Although exiled Cambodian politicians and human rights groups criticized Macron for embracing the Cambodian leader, son of former strongman Hun Sen, the meeting produced $235 million in French development pledges.
France’s Lagardere Travel Retail last month said it had won a 12-year concession to manage retail and dining operations at Techo Takhmao in cooperation with a local partner under a profit-sharing arrangement with Cambodia Airport Investment Co. (CAIC), the new airport’s developer.
Techo Takhmao is being built by units of state-owned China State Construction Engineering and Metallurgical Corporation of China. The $1.5 billion project has been financed locally by CAIC, controlled by local conglomerate Overseas Cambodian Investment Corp., following China Development Bank’s withdrawal from an agreement to provide $1.1 billion.
When fully developed, Techo Takhmao is expected to be able to handle 50 million passengers a year, 10 times as many as Phnom Penh International Airport can. The existing gateway processed 4 million passengers last year. The new airport is more than twice as far from the city center and currently lacks highway or public transport links.
Cambodia Airports, meanwhile, continues to operate the international airport in coastal Sihanoukville. The Cambodian government said in February that the company would finish a project to expand the capacity of the airport terminal by 80% by 2026.
Source: https://asia.nikkei.com/Business/Transportation/Cambodia-resolves-Phnom-Penh-airport-tensions-with-new-rights-grant
