KOH KONG, Cambodia, Jan. 12 (Xinhua) -- Cambodia will have a greater possibility to supply reliable electricity to households and businesses with cheaper prices after a Chinese-built 338- megawatt Russei Chrum Krom River hydropower dam began operations on Monday, Cambodian Prime Minister Hun Sen said.

"This project is considered as the largest hydroelectric station in Cambodia so far," he said at the inauguration ceremony, which was also attended by Chinese Ambassador to Cambodia Bu Jianguo. "The dam will provide great benefits to both households and business establishments."

Electricity shortage is one of the most serious constraints to Cambodia's effort to attract new investments, according to a joint World Bank and Asian Development Bank report released in October last year. The report said electricity in Cambodia is "not only more expensive than most neighboring countries, but the supply is also intermittent."

Hun Sen said through the dam, the country's capacity of electricity supply will be increased as the prices will be further lowered.

Meanwhile, the premier expressed sincere and profound thanks to the government of China for encouraging Chinese investors to Cambodia, stressing that the investment in energy was vital for socio-economic development and poverty reduction in Cambodia.

"The inauguration of the dam also clearly reflects close relations and cooperation between Cambodia and China," he said.

Situated in the jungle in Mondol Sima district of Southwestern Koh Kong province, the Russei Chrum Krom River hydropower station was developed by the giant power company China Huadian Corp for a cost of 495 million U.S. dollars, Cambodian Minister of Mines and Energy Suy Sem said.

The dam took nearly five years to be constructed under a contract of a 35-year build-operate-transfer (BOT) with the Cambodian government, he said, adding that the dam will produce the power of about 1.02 billion kwh per year.

"The electricity generated from the dam will be sold to the state-owned Electricity of Cambodia at the price of 7.35 U.S. cents per kilowatt-hour," the minister said. "The government will earn tax revenue of 12.5 million U.S. dollars a year from the project."

Li Qingkui, Chairman of the China Huadian Corp, said the dam was another historic milestone of economic cooperation between China and Cambodia, while thanking the Cambodian government for fully supporting the project.

"It is the first and largest project that the China Huadian Corp has invested in Cambodia," he said. "We're confident that the dam will contribute to expanding electricity supply to households and businesses in Cambodia."

According to the Electricity Authority of Cambodia, the country had 1,370 megawatts of electricity to supply to about 2.26 million houses or nearly 50 percent of the country's 14.8 million people by 2013.

It is projected that all the villages in the nation will have electricity by 2020, and at least 70 percent of the households will have access to electricity by 2030.

China is the largest investor in developing hydroelectric plants in Cambodia. According to the Ministry of Mines and Energy, Chinese firms have invested more than 1.6 billion U.S. dollars to build six dams with a total capacity of 928 megawatts in this Southeast Asian nation.

To date, five dams are fully operational, and the sixth dam, a 246-megawatt Tatay River Hydropower Plant in Koh Kong province, will be put into operations later this year.