Project ID: 39178

China Eximbank provides $99.3 million preferential buyer's credit for Phase 1 of Vaico Irrigation Project (Linked to Project ID#48911, #62162, #32160)

Commitment amount

$ 116593991.6727102

Adjusted commitment amount

$ 116593991.67

Constant 2021 USD


Funding agency [Type]

Export-Import Bank of China (China Eximbank) [State-owned Policy Bank]




Agriculture, forestry, fishing (Code: 310)

Flow type


Level of public liability

Central government debt





Mixed (The next section lists the possible statuses.)





Financial Flow Classification

OOF-like (The next section lists the possible statuses.)

Official Development Assistance

Other Official Flows

Vague (Official Finance)

Flows categorized based on OECD-DAC guidelines

Project lifecycle


Completion (The next section lists the possible statuses.)










Actual start


Actual complete




On February 2, 2012, China Eximbank and the Government of Cambodia signed a $99,303,000 preferential buyer's credit (PBC) agreement [China Eximbank PBC No. (2012) 3 Total No. (191)] for Phase 1 of the Vaico Irrigation Project. The PBC carried the following borrowing terms: a 20-year maturity, a 7-year grace period, and a 2% interest rate. The proceeds from the PBC were used to partially finance an EPC contract with Guangdong Construction Engineering Construction Co., Ltd. (GDFC). The purpose of Phase 1 was to (a) restore a set of irrigation canals (measuring 13 km in length) in Koh Sotin district within Kampong Cham Province and Sithor Kandal district within Prey Veng Province; and (b) restore a set of irrigation canals (measuring 27 km in length) in Sithor Kandal district and Kamchay Mea district within Prey Veng Province. The canals are between 44 and 55 meters wide and between 18 and 25 meters deep. Phase 1 also supported two additional canals (measuring 78 km in length) in Svay Chikray commune within Sithor Kandal district and Ta Douk commune within Mesang district in Prey Veng. The ultimate goal of the project was to irrigate an estimated 108,300 hectares of wet-season rice and 27,100 hectares of dry-season rice in Kampong Cham and Prey Veng provinces. GDFC was the EPC contractor responsible for implementation. The project was supervised by Guangzhou Wanan Construction Supervision Co., Ltd. (GWCSC). Project implementation commenced on March 1, 2013. By May 30, 2014, the first phase of the project had achieved a 60% completion rate. Then, on April 24, 2015, H.E. Lim Kean Hor, Minister of Water Resources and Meteorology of Cambodia, conducted a site inspection. The project was ultimately completed on February 2, 2017. Critics — such as journalists from the Bangkok-based newspaper, The Mekong Eye — have questioned the efficacy of the Vaico Irrigation Project, noting that in late-2018 (more than a year after Phase 1 construction was completed) a single hectare had yet to be irrigated via Phase 1. The effectiveness of the construction was also called into question. Reporting in 2016 suggested that the main canals supported by the project were bone dry; at the time, a village resident explained that the project only supplied water during the wet season and as such the double season cropping objective of the project was impossible. Another journalist’s review revealed large bank erosion only a few years into the project and the consistent vandalization or malfunction of the motors used to lift and lower sluice gates. Additionally, in July 2018 (the peak of the wet season). the water level of the main canals was described as too low to be effective. Rather than supplying irrigation, the canals were largely serving as drainage from adjacent fields. Other than a few farmers using tractor pumps to pump water from the canal to their fields via plastic piping, the fields surrounding the canals remained effectively solely rainfed. In fact, most farmers the journalist interviewed described the project as a hydrological barrier to water coming to their fields during the dry season and draining from them during the wet season, rather than the hydrological assistance it was projected to provide. It is possible that the engineers constructing the project did not fully comprehend or properly accommodate the complex hydrodynamics of the Vaico watershed and there are concerns that the project will only interfere with the Mekong’s flooding cycles, which deliver crucial nutrients to the paddies. According to the Mekong Eye, both the construction engineers and overseeing officials, such as those from the Cambodian Ministry of Water Resources and Meteorology (MoWRaM), largely disappeared once the project was completed, leaving farmers on their own to figure out how to utilize, or in most cases work around, the project. Although there is hope that Part II of Phase 2 will come with significantly strengthened monitoring and evaluation of the project’s success and/or assistance for proper utilization, as of now the completed project has been abandoned by both its financiers and managers and the farmers who were ‘expected’ to benefit from it. A Farmer Water User Community (FWUC) was established upstream of the Vaico project in Kamchay Mea District, in Doun Koeng Commune, to manage a different irrigation development in 2010. However, it folded a few months after its initiation, due to a lack of interests to pay water access fees for mostly dysfunctional canals. There is some concern that similar issues may plague the FWUC expected to be set up for the Vaico project’s management. However, reporting by the Bayong Times in February 2020 does present hope. It describes a study on the technical and hydrological aspects of the project, which was carried out by MoWRaM’s Department of FWUC and Prey Vieng and Svay Rieng’s provincial MoWRaM departments, to prepare for FWUC management of the project and the establishment of a Vaico Irrigation Management Committee. The study included inspection of the four main canals of the project, the intake structure in Kampong Trabek Commune, and the two pumping stations in Ansong commune and Pratheat Commune. The study team also met with Prey Veng’s Provincial MoWRaM department to clarify the need to establish effective management and monitoring systems. A March 2021 press release from MoWRaM showed that perhaps such coordination was effective. It described that the Prey Veng provincial MoWRaM department coordinated with the Chinese construction team to pump water from Vaico’s second pumping station to the first main canal to save dry season rice in five communes in Svay Antor district. Another set of concerns relate to the environmental and social impacts of the project. The main canal of the Vaico project is fed by Boeung Krapik (Krapik Lake). Research by the Asian Development Bank (ADB) indicates that lake levels are now completely controlled by the Vaico inlet pump station. Researcher David Blake, writing for the Mekong Eye, raised concerns over whether, with the added drain of the Vaico irrigation system, the lake would be able to fulfill its usual ecosystem services such as wildlife habitat, fish provision, and irrigating adjacent agriculture. Normally, Boeung Krapik creates a wide seasonal marsh by overflowing across the floodplain in Sithor Kandal District, distributing suspended sediments to fertilize adjacent farmland. Blake raised concerns that in feeding Vaico’s canals, the lake level might drop, eliminating this natural phenomenon so critical to local livelihoods.Furthermore, Blake noted that the construction company working on the Vaico project had bought 30 nearby houses at $10,000-25,000 per property, and speculated this was to build a dam as part of Part I of Phase 2.

Additional details

1. This project is also known as Phase 1 of the Vaico River Project. The Chinese project title is Vaico水利发展项目 or 柬埔寨磅湛菠萝勉柴桢省Vaico灌溉发展项目-第一期. 2. Phase 1 reportedly involved restoration of 40 km of old canals and the construction of 78 km of new canals (30% in Kampong Thom province and 70% in Prey Veng province). 3. The China Eximbank PBC that supported this project was part of a $302 million package of concessional loans signed by Cambodian Prime Minister Hun Sen on February 2, 2012 (see linked Project ID#32160). 4. China Eximbank and China’s Ministry of Commerce (MOFCOM) also issued loans to support Phase 2 of the Vaico Irrigation Project (captured via Project ID#48911 and ID#62162).

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Direct receiving agencies [Type]

Government of Cambodia [Government Agency]

Implementing agencies [Type]

Guangdong Foreign Construction Co., Ltd (GDFC) [State-owned Company]

Loan Details


20 years

Interest rate


Grace period

7 years

Grant element (OECD Grant-Equiv)


Bilateral loan

Export buyer's credit

Investment project loan

Preferential Buyer's Credit