Energy-starved Cambodia on Wednesday opened the country's largest hydropower dam to date, a multi-million dollar Chinese-funded project that has attracted criticism from environmental groups.

Prime Minister Hun Sen said the start of operations of the 194-megawatt hydroelectric dam, which cost more than $280 million, in southern Kampot province was a "historic event" in the development of the nation.

He brushed aside the concerns of local and foreign activists, saying the environmental impact of the dam had been "well studied" and it would help bring down electricity prices in areas including the capital Phnom Penh.

"There is no development that will not impact on the environment," he said in a speech broadcast on national radio, urging "extreme environmentalists" to "look at the whole forest rather than each single tree".

US-based campaigners International Rivers said the Kamchay dam had destroyed hundreds of hectares of forest and farmland and warned it would have a negative impact on fisheries and on local people's livelihoods.

"Consideration of the dam's environmental impacts had no place in the project's decision-making," said Ame Trandem, the non-profit group's Southeast Asia programme director.

"As the first large dam in Cambodia, we hope this project does not set precedent for future energy planning and development in the country."

Around a quarter of households in the impoverished nation currently have access to electricity.

Spiralling utility prices, driven by the lack of supply, are a major obstacle for Cambodia to attract foreign investment, and the government has struggled to find a way to bring down the cost of power.

Nine more dams, including at least four funded by China, are set to open by 2019, and once they are all operational the government says they will generate 2,045 megawatts of power, serving all Cambodia's provinces.

The inauguration of the Kamchay dam came a day before Cambodia, Laos, Thailand and Vietnam are set to announce whether Laos will push ahead with the development of the controversial Xayaburi megadam on the lower Mekong River.

Cambodia has called for more examination of the cross-border impacts of that project before a final decision is made by Laos on whether to go ahead.