Gas Prices Could Fuel Unrest

(Photo: Samorn Heng)

A group of civil society organizations in Cambodia warn of disorder if the government does not intervene.

2012-04-09

Radio Free Asia

A consortium of 20 civil society organizations petitioned Cambodia’s parliament Monday, demanding intervention to reduce the cost of gasoline in the nation, and warning of country-wide demonstrations if nothing is done.

The price of gasoline in the impoverished nation reached 5,950 riel (U.S. $1.49) per liter (0.26 gallons) Monday from 5,200 riel (U.S. $1.30) in May last year, which the groups said was far higher than that in neighboring countries. The cost of gas was 4,500 riel (U.S. $1.12) per liter in May of 2010.

The Cambodian prices are much higher than those among immediate neighbors Laos (U.S. $1.10), Vietnam (U.S. $ 1. 05) and Thailand (U.S. $1.27), fueling smuggling of gasoline into Cambodia to cash in on the price difference.

Phuong Sovann, president of the Government Civil Servant Association, which signed the petition to Cambodia’s National Assembly, said the high cost of gasoline could be attributed to a lack of competition in the country’s petroleum industry.

Government eyes fuel taxes [... only after street protest!]

Tuk tuk drivers gather to take part in a protest over fuel prices, outside the National Assembly yesterday in Phnom Penh. Photo by Hong Menea

Tuesday, 10 April 2012
Khouth Sophakchakrya
The Phnom Penh Post

The government plans to review fuel import taxes in the wake of soaring prices at the pump over the past few weeks, an official said yesterday.

Cheam Yeap, Cambodian People’s Party lawmaker and chairman of the finance and banking commission, said the government will look into such measures as reducing the oil import tax and pushing for Chevron to increase its oil exploration activity in Cambodia.

“Right now, we need to cut some more taxation of the oil and gas importing to reduce the price [of fuel],” he said.

Cambodia imports 100 per cent of its gasoline, he said, attributing recent price hikes to oil-producing companies and bodies like OPEC controlling prices in the global market.

Civil society demand lower gasoline price

http://www.youtube.com/watch?v=fRCpViNT818

Petition to Lower Gasoline Price in Cambodia

(All Photos: Samorn Heng)

For additional photos: http://www.facebook.com/media/set/?set=a.347436195305303.79353.100001167752786&type=3


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រដ្ឋាភិបាល​អាច​បង្ហាញ​តម្លាភាព​អំពី​ប្រេង​សាំង​បាន​ទេ? - Can the gov't display transparency in gasoline price?

លោក គាត ឈន់​ នៅ​ក្នុង​ពិធី​មួយ​ កាល​ពី​ខែ​មុន​។ រូបថត ផា លីណា​

Tuesday, 03 April 2012 13:44
កាន់ វិរៈ
Letter to The Phnom Penh Post

ជូន​ចំពោះ​លោក​ចាងហ្វាង និង​លោក​និពន្ធ​នាយក

ថ្មីៗ​នេះ ខ្ញុំ​ឮ​រដ្ឋាភិបាល ជា​ពិសេស​ លោក គាត ឈន់ រដ្ឋ​មន្ត្រី​ក្រសួង​សេដ្ឋកិច្ច និង​ហិរញ្ញ​វត្ថុ បាន​មាន​ប្រសាសន៍​ថា រដ្ឋាភិបាល​បាន​ឧបត្ថម្ភ​ពន្ធ លើ​ការ​នាំ​ចូល​ប្រេង​ក្នុង​ឆ្នាំ ២០១១ ចំនួន​ជាង ២០០ លាន​ដុល្លារ​ សម្រាប់​ប្រេង​ដែល​នាំ​ចូល​ជាង ១​ លាន​ម៉ែត្រ​គូប (តែ​បើ​គណនា​តាម​ចំនួន​មធ្យោបាយ​ធ្វើ​ដំណើរ និង​មធ្យោបាយ​ឧស្សាហកម្ម សេវាកម្ម កសិកម្ម​គ្រប់​ប្រភេទ ឃើញ​ថា​ តម្រូវការ​ប្រេង​នៅ​កម្ពុជា​ មិន​តិច​ជាង ២ លាន​ម៉ែត្រ​គូប​ទេ ក្នុង​មួយ​ឆ្នាំ) ប៉ុន្តែ​បើ​ដូច្នោះ​មែន​ ដើម្បី​តម្លាភាព តើ​លោក​ គាត ឈន់​ ឬ​រដ្ឋាភិបាល អាច​បង្ហាញ​បាន​ទេ​ នូវ​តួ​លេខ​ជា​ផ្លូវ​ការណ៍ ថា​តើ​ខែ​ណា​ នាំ​ចូល​ប៉ុន្មាន ខែ​ណា​នាំ​ចូល​ប៉ុន្មាន​ និង​សូម​បង្ហាញ​ផង តើ​សាំង ១​ គូប​ មាន​ចំនួន​ប៉ុន្មាន​លីត្រ ១ ​គូប​ បង់​ពន្ធ​ប៉ុន្មាន បន្ទាប់​មក​ឧបត្ថម្ភ​ពន្ធ​ដែល​លោក​ថា អស់​ជាង ២០០​លាន​ដុល្លារ​នោះ​ តើ​រដ្ឋ​នៅ​សល់​ប៉ុន្មាន​?

សព្វ​ថ្ងៃ​នេះ​នៅ​ពេល​ដែល​ប្រេង​ឡើង​ថ្លៃ ហើយ​ត្រូវ​ប្រជាជន​រិះ​គន់ គេ​តែង​តែ​ឃើញ​រដ្ឋាភិបាល​ចេញ​មុខ​អះអាង​ថា​រដ្ឋ​ឧបត្ថម្ភ​ពន្ធ ជា​និច្ច។ ឧបត្ថម្ភពន្ធ​ហើយ​នៅ​ថ្លៃ​បុណ្ណឹង ចុះ​ទម្រាំ​តែ​មិន​ឧបត្ថម្ភ​ទៀត​នោះ តើ​ប្រេង​និង​ឡើង​ថ្លៃ​ដល់​កម្រិត​ណា?

Hun Sen blames oil companies for gasoline price increase … but guess who own some of these companies: His family and his cronies

Thursday, May 28, 2009
Everyday.com.kh
Translated from Khmer by Socheata

Hun Sen scolded oil companies in Cambodia, including: Sokimex, Tela, Caltex, and Total, and he was wondering why these companies increased the price of gasoline. If there is no price reduction, it should not increase, he said … On 27 May, Hun Sen blamed the increase of gasoline price during the inauguration of the new Monivong bridge and the groundbreaking ceremony for a bypass bridge. Hun Sen criticized these companies for blaming the international market for the price increase, but when the price on the international market drops, they never drop the price of their gasoline … How could they do this? Hun Sen wondered. Hun Sen said: “Look, let’s think about it… helping the people is not helping the government, you help the people to alleviate their difficulties.” Hun Sen also took the opportunity to mock a political party which, during the 2003 election campaign, said that it will lower the price of gasoline by 1,700 riels ($0.43) per liter, and another party said that it would lower the price by 1,500 riels ($0.38) per liter. Hun Sen said: “They act as if they own the oil, but in reality, the oil belongs to others.”

Price increase was a result of of the retail petrol sector operating as a cartel: SRP MP Yim Sovann

World oil price increase felt at Cambodia's petrol pumps

Wednesday, 13 May 2009
Written by Kay Kimsong
The Phnom Penh Post

Increase in world oil price well above $50 a barrel impacts on Cambodian fuel – all of which has to be imported – with further price rises expected

PETROL prices in Phnom Penh have jumped by up to 200 riels (4.8 US cents) per litre in the past week, with petrol companies and analysts saying motorists should expect further increases as global petrol prices continue to have a knock-on effect at the petrol pump.

Since February, international prices for crude oil jumped from a year low of US$45 to $58 per barrel - a rise of nearly 30 percent.

With Cambodia still importing 100 percent of its oil products, the country remains susceptible to global market fluctuations, according to oil analyst Bin May Mialia. But although stockpiled, low-cost oil derivatives had so far helped offset the sharp rise in global crude oil, petrol prices were expected to increase as these reserves were depleted.

"We have seen an increase of only about 100 or 200 riels because we can mix newly imported gasoline with what we have in storage, but prices could increase higher if they keep importing the newly priced oil," he said. "Even if the price remains stable at $58 next week, you might see price of gasoline and diesel increase by 200 or 300 riels more."

Heu Heng, deputy director general for Cambodian petrol giant Sokimex, said his company had increased prices by 50 riels per litre at the pump, to around 3,400 riels for "gold" grade gasoline.

"It is normal that when the price of international crude oil increases, we increase our prices, too, because we import everything from outside," he said. "We cannot predict the international oil price, but when it is down we will drop down as well."

According to government statistics, retail prices for gasoline increased from 2,950 to 3,350 riels per litre last week - an increase of over 13 percent - while diesel rose from 2,850 to 2,950 riels over the same period.

We can mix newly-imported gasoline with what we have in storage.

But Rong Chhun, president of the Cambodian Independent Teachers Association, which has lobbied the government to introduce fuel subsidies, told the Post that high petrol costs were a result of price gouging by distributors, and called on the government to monitor pump prices to ensure they remain fair for Cambodians.

"Prime Minister Hun Sen appealed often to private companies to lower the price of gasoline, but it only works for a short time," he said. "As prime minister of the country, [he] has to issue a strong order to private companies. Even if there is a free-market policy, it still needs to be managed by the government."

Sam Rainsy Party lawmaker Yim Sovann said the price increase was a result of of the retail petrol sector operating as a cartel, and that the biggest petrol retailers have "formed a team" to set artificial prices. He said Cambodia also taxed gasoline at the rate of 1,000 riels per litre, and called on the government to abolish the tax - a measure that would benefit economic development as well as the poor.

"The high price of gasoline and diesel will drive out investors from Cambodia, and we will face challenges from competitors," he said. "I think investors and people are both facing the same problem once goods prices increase and lead people into poverty."

Rule by threat: When Hun Sen in angry ... gasoline price will come down or else ...

Petrol prices to drop sharply, or else: PM

Tuesday, 23 December 2008
Written by Chun Sophal and Hor Hab
The Phnom Penh Post

"I have had enough with the high petrol prices, and I will meet with all companies."

Prime Minister Hun Sen threatens to summon petroleum company heads, saying falling oil prices are not being reflected at the pump
OIL companies are facing renewed pressure to cut pump prices in line with falling international crude following another scathing speech by Prime Minister Hun Sen on Monday.

The premier lashed out at oil importers and threatened to summon company heads unless he saw immediate action being taken to bring prices down at the pump.

"I have had enough with the high petrol prices, and I will meet with all companies at once," said Hun Sen.

He accused the companies of price-gouging in a speech that at times sought to portray the prime minister as the sole impetus behind falling prices.

"I wonder about the oil price. When I tell petroleum companies to decrease the price, they decrease it, but when I don't, they don't decrease it," Hun Sen said.

International crude oil has fallen drastically from a record US$147 in July to about $43 on weaker demand and a slow global economy.

Local pump prices have fallen as well, albeit at a slower rate, from a record 5,750 riels in July to 2,950 currently at Sokimex and Tela, and 3,050 at Total and Caltex.

"We understand that [the companies] have stocks of imported oil, but companies should not use this as an excuse to keep the price high," Hun Sen said.

High petrol prices helped drive the Kingdom's inflation rate to more than 30 percent this year. Since July, the prime minister has twice called on companies to cut prices in an effort to curb inflation and reduce countrywide transport fees.

The Ministry of Economy and Finance has met with the companies six times since July to press for price cuts, but the declines have been small.

The Opec factor

Heu Heng, deputy director general of Sokimex, welcomed the prospect of a face-to-face meeting with the prime minister.

"We respect the government's stance and we will cut the price if the international market price stablises," Heu Heng said.

But he warned that market interventions by Opec could boost prices, pointing to the oil cartel's decision to cut output by 4.2 million barrels per day in an effort to meet its target price of US$65 to $75 per barrel.

"Sokimex is the leading imported oil company that sells oil at the lowest price [2,950 riels per litre], and prices will decrease more in the future," Heu Heng added.

Opposition lawmaker Son Chhay said Monday he supports Hun Sen's efforts and hoped oil companies would heed the government's calls.

"The government should not allow imported oil companies to sell based on their self-interest. They have a history of increasing the price abruptly when it is high, while failing to cut it when it declines," Son Chhay said.

Kang Chandararot, director of the Cambodia Institute of Development Study, said he is not sure what pump prices should be but said they should correlate with the international oil price.

"The government must try to curb the local price to match with world crude oil price," he said. "We need more documents from the oil companies."

Hun Sen forced gasoline price reduction on crony companies, while foreign companies ignore his appeal

Gasoline price: Hun Sen obtained a price reduction from local companies while thrashing foreign oil companies

By Ros Dina
Ka-set
Unofficial translation from French by Luc Sâr
Click here to read the article in French
Click here to read the article in Khmer

On Monday 17 November, prime minister Hun Sen appealed to gasoline companies to reflect the lowering of international oil price on the retail price of gasoline at pump stations across Cambodia. His appeal was immediately followed by actions taken by two local companies: Sokimex and Tela [both of which belong to Hun Sen’s cronies] which announced a lowering of 200 riels ($0.05) and 150 riels ($0.0375), respectively, on the price of all their gasoline, before Hun Sen even finished his speech …

The lack of drop in gasoline price to reflect the price reduction of crude oil was denounced for the past several weeks, and up to now, nothing has changed. Such inaction led to criticisms on the government by both the consumers and the opposition parties.

“I ask that Sokimex and Tela to provide a gift to the prime minister [by lowering gasoline price]. And if they don’t want to give me this gift, they should at least do that for the people,” Hun Sen declared during the inauguration of a South Korean bio-fuel factory in the province of Kandal.

Hun Sen directly addressed his speech to representatives from the two local gasoline companies who were present, asking them to contact their respective management to obtain a quick response.

The Sokimex representative first announced a lowering price of 150 riels, then increased it to 200 riels, before Hun Sen even finished his speech… The Tela company maintained its price reduction to 150 riels per liter.

Hun Sen also thrashed the attitude of foreign gasoline companies which did not play by his rule. He then turned to the local companies, asking them not to wait for the price lowering from their foreign competitors, but instead for them to initiate the price reduction movement without fearing for their image. During a previous meeting held at the ministry of Finance, the Sokimex management justified maintaining a higher price for fear that consumers would associate lower price to lower quality. “Price can be lower, but the quality of gasoline is the same everywhere,” Hun Sen said.

“When the price of crude oil climbed pass $140 per barrel, the retail price of gasoline rose to 5,700 riels ($1.425 per liter). But now, while the price of a barrel drops to $54, the price [of retail gasoline] does not drop in Cambodia! We can understand that you have an old surplus stock, but why did it take so much time to get rid of it? […] I don’t understand,” Hun Sen pummeled. “If Caltex and Total do not lower their price, we will leave them alone, but nobody will buy from them.”

Next, Hun Sen justified the government inaction to obtain gasoline price reduction because of the need to respect “the free market and the WTO rules.”

On Monday morning, the retail price of one liter of super gasoline in Phnom Penh was at 3,900 riels ($0.975) at the Sokimex station, 3,800 riels ($0.95) for the regular gasoline and 3,700 riels ($0.925) for gasoil.

Petrol companies slammed

A supply truck pulling into a Sokimex station in Siem Reap. Sokimex is Cambodia's largest petroleum supplier. (Photo by: Tracey Shelton)

Wednesday, 05 November 2008
Written by Chun Sophal and Nguon Sovan
The Phnom Penh Post

The minister of finance says local petroleum suppliers are keeping prices artificially high, but companies say they're just taking a practical approach

THE government has lashed out at Cambodian petroleum companies, accusing them of price gouging as a Monday deadline for petrol prices at the pump to drop to 4,000 riels (US$1) a litre passed unmet.

"Buyers should buy oil from suppliers that sell at cheaper prices," Finance Minister Keat Chhon told the Post, adding that he felt companies were colluding to keep pump prices artificially high.

Oil suppliers agreed during a meeting with finance officials Thursda7 to drop prices to 4,000 riels per litre by Monday if international crude prices dropped to $70 per barrel or lower.

On Tuesday, international crude closed at $63.80 per barrel, and petrol prices in Cambodia remained above 4,000 riels.

Keat Chhon said companies were employing dubious marketing gimmicks - such as claiming that their oil was higher quality than the competition - to dupe consumers.

"I'd like to send a message to all consumers not to be cheated by suppliers because their oil has been imported under inspection," he said.

"The price and quality are the same as other oil suppliers. So, if they say their oil is higher in quality than oil from other suppliers, this is incorrect," he said.

Despite their promises last week, Caltex and Total were both selling petrol at 4,200 riels per litre for regular and 4,300 per litre for super, as of Tuesday - higher than competitors Sokimex and Tela, which were charging 4,100 and 4,200, respectively.

The Total advantage

Stephane Dion, managing director of Total, wrote by email on Monday that Total offers high-quality fuels from reputable suppliers.

"Quality is consistent and smuggled products are absent from Total service stations. Total also prides itself in delivering the exact quantity of fuel (ie, one litre is exactly one litre) and superior service."

He added that despite this product and service offer, pump prices at Total service stations are not materially different from competitors' prices.

"Based on our daily price checks, since the beginning of 2008 the average price differential between Total and local companies has been lower than one percent."

He said Total pump prices are clearly displayed on totems and pumps at all times, and customers are free to select their service station or brand, adding that Total has been continuously passing over to customers drops in the international oil prices.

Nay Chamnab, a communications specialist with Caltex, declined comment on the quality of Caltex petrol compared with that of other companies, but told the Post Tuesday that "the fluctuation of international crude and finished product prices will inevitably affect the local retail pump prices."

Nay Chamnab said the timing of pump price adjustments depends on a combination of factors, including currency exchange rates, inventory levels, freight rates, product quality premiums, refined product prices, market demand and competitors' reactions to market forces.

"We firmly believe in offering our products to our customers at fair and reasonable prices," she said.

Heu Heng, deputy director general of Sokimex, said Monday that his company will keep prices at 4,100 riels per litre for regular petrol until Friday this week, after which the company will reconsider dropping to 4,000 riels.

"I can't explain further the company's decision to keep prices where they are, as this is an internal matter," said Heu Heng. "We will try to adjust to revenue and not take advantage of consumers."

Chhon Oun, managing director of Tela, said Monday his company is currently watching the international oil market closely.

"We can't drop oil prices too fast because prices on the international market have changed quickly and are difficult to predict," he said. "We will drop prices based on practical considerations."

Hun Sen should start by urging his own family (Tela) and crony (Sokimex) first to stop gasoline price gouging in Cambodia

Hun Sen has pressured petroleum companies to lower prices as a way of reducing economic pressure on the poor. Cambodia’s pump prices are higher than in both Thailand and Vietnam. (Photo: Tracey Shelton)

PM urges local petroleum firms to stop price gouging

Friday, 03 October 2008
Written by Kay Kimsong
The Phnom Penh Post

Hun Sen has attacked local petroleum companies, saying they are using the global financial crisis as an excuse to rip off consumers

THE prime minister has lashed out at the Kingdom's petroleum companies, accusing them of price gouging and strongly urging they lower the price of petrol at the pump immediately.

"Push [the prices] down [because] when fuel prices increase, it affects everything," Hun Sen said during a scholarship award ceremony for 500 students in Phnom Penh on Thursday.

The prime minister warned companies that global financial turmoil was no excuse to raise prices.
"It is an American financial crisis and some American banks face problems, but it shouldn't be pumping up the price of fuel here," he said. He added that they cannot blame international market turmoil.

After a period of hikes, local fuel prices have stabilised at around 5,000 riel a litre, but have not decreased even as international crude prices dropped to around US$100 per barrel from a record high in mid-July of around $145 a barrel for crude.

Order, don't ask

Union leader Rong Chhun said he welcomed Hun Sen's efforts to push down petrol prices but said the prime minister needed to go further.

"He is the prime minister, he should not just make the same request [to lower petrol prices] again and again, he must use his power to order the petroleum companies to lower prices," he said.

Rong Chhun urged the prime mnister to use price caps to reduce the price of petrol. Companies should be allowed to make a reasonable profit but not to price gouge, he said, adding that skyrocketing fuel prices have dealt a major blow to already cash-strapped civil servants.

Rong Chhun said the price of fuel in Cambodia should be a maximum of 3,800 riel or 4,000 per liter and warned that gas prices were one of the key issues voters would use to assess the performance of the new government.

"I think all voters are watching [Hun Sen] who is leading a country alone, for good or bad, we will see," Rong Chhun said.

He also warned that the some 400-plus members of the Council of Ministers should be forced to reduce the percentage of the national budget spent on subsidised fuel for government officials.

"If the government can reduce how much it spends subsidising petrol for officials, the country will have enough money to increase salaries of teachers," Rong Chhun said.

Pump prices in Phnom Penh on Thursday stood at 4,900 riel per litre (Sokimex) and 5,050 per litre (Caltex and Total).

Seng Chung Ly, network manager for Total, declined comment on whether the company would be reducing prices in accordance with the prime minister's request. An official at Sokimex was too busy to comment on Thursday.

Fuel Importers Agree To Nudge Prices Down

Fuel companies have agreed to lower fuel prices to around 5,000 riel per liter, about $1.25.

By Ros Sothea, VOA Khmer
Original report from Phnom Penh
22 September 2008

Cambodia's main fuel import companies have agreed to reduce the price of fuel by 100 riel, about $0.02, per liter, but economists said last week the decrease doesn't match the fall in global prices.

The lower costs decided at a meeting held by the Ministry of Economy and Finance on Friday, following a call by Prime Minister Hun Sen for a reduction in costs.

"We reached our goal," Finance Minister Keat Chhon said Friday. "From Monday on, oil companies will reduce the fuel price 100 riel per liter. So it will be reduced from 5,000 or 4,900 riel," about $1.25.

Fuel prices directly affect many Cambodians, but the prices are also a driving factor in high inflation in recent months.

On Saturday, global crude oil was at $104 a barrel, down 30 percent from its highest point, $147. But Cambodia's fuel costs have only decreased about 10 percent from their highest prices, which matched the global surge.

"Our fuel price doesn't equal other markets," said Chap Sotharith, an economist at the Cambodian Institute for Cooperation and Peace. The global price "already had a 30 percent decrease, but ours has decreased only 10 percent."

A decrease of 30 percent in Cambodia would mean prices as low as 3,800 riel, or $1.90, said Sok Sina, an independent economist.

Chhun Oun, managing director of the fuel company Tela, disagreed, saying the current Cambodian prices already match global prices.

Cambodia has at least seven local and foreign fuel importers, but most of them before Friday had been reluctant to lower costs.

Asked Friday whether the cost could be lowered more, Seng Chhung Ly, chief of retail network for France's Total, said, "I don't know. We have to wait and see together."

Critics say the price in Cambodia stays high because the major fuel companies cooperate to keep prices inflated.

"The situation in Cambodia seems to be one of the underdog against oil companies," said Chan Sophal, president of the Cambodian Economic Association. "The four or five companies together limit the price to look like only one. In this situation, the consumers are the losers and the sellers are the winners."

Keat Chhon dismissed such criticisms, saying that during a period when global oil prices rose 80 percent, Cambodia's prices rose only 40 percent.

Meanwhile, he said, the government has subsidized fuel costs more than $260 million since January and plans to spend another $30 million a month through the end of the year.

Thank you, Comrade Keat Chhon, for obtaining the penny drop in gasoline price!

Gasoline price to drop by 100 riels ($0.025) in Cambodia on 22 September

19 Sept 2008
By Leang Delux Cambodge Soir Hedbo
Translated from French by Luc Sâr Click here to read the article in French

Keat Chhon, the minister of Economy, obtained from the distributors a lowering of the retail price of gasoline.

To save money, it is better off to wait until Monday morning to fill in your tank. By then, the current retail price of gasoline will drop from 5,000 riels ($1.25) to 4,900 riels ($1.225), this starting from next week.

In the morning of Friday 19 September, Keat Chhon, the minister of Economy and Finance, was able to request this price drop from the distributors during a meeting at his ministry. The roundtable meeting took place only four days after Prime minister Hun Sen called for a push in the lowering of fuel price which started in the last few weeks.

“Our efforts to lower the price of gasoline was not done to attract popularity, but to better control inflation,” Keat Chhon explained while indicating that, since the beginning of the year, the State lost an earning of $263 million from imported gasoline tax in order to rein in the increase of gasoline price.

During the first six months of the year, fuel consumption in Cambodia has increased by 24%.

Union boss pushes PM to lower fuel prices

Thursday, 04 September 2008
Written by Kay Kimsong
The Phnom Penh Post

UNION activist Rong Chhun in a letter dated Wednesday lobbied Prime Minister Hun Sen to pressure petroleum companies to lower fuel prices to 4,000 riels per litre.

After a period of hikes, local fuel prices have stabilised at around 5,400 riel a litre, but have not decreased even as international crude prices dropped US$36 to around $110 per barrel from a record highs in mid-July.

"The petroleum companies can[not] reject an order from the prime minister," said Rong Chhun, the Cambodian Independent Teachers Association president. He said skyrocketing fuel prices have dealt a major blow to already cash-strapped civil servants.

Government moves to end price gouging as gasoline prices hit record highs

Pump prices remain at records highs, hovering just below 6,000 riels per liter. (Photo: Tracey Shelton)

Friday, 06 June 2008
Written by Kay Kimsong
The Phnom Penh Post

Finance Minister Keat Chhon has ordered a special ministry committee to be formed to monitor the price of gasoline amid fears the fuel companies were gouging prices, which have crept towards record highs of 6,000 riels ($1.50) a liter during the past few days, a ministry official said.

The move, announced June 4, was the first time the government has intervened directly to try and ease spiraling gas prices, which have also driven up the cost of food and other consumer goods.

Finance Secretary of State Chea Peng Chheang told the Post that the ministry was worried that fuel companies were taking advantage of skyrocketing global oil costs to unfairly raise local pump prices

The new committee, while not putting caps on prices, would "work closely" with the fuel companies to determine how much should be charged for gasoline and diesel.

“Petroleum companies need not ask the ministry how much to raise prices, but they need to make sure they are not charging over market value,” he said.

The committee will also assess the cost of other consumer goods, which have risen sharply.

"The ministry just wants to understand why a company decides to raise prices for this or that, but the ministry will never interfere with a company's pricing decisions ... it is a free market in Cambodia," Chheang said.

Officials from fuel companies participating in the June 4 meeting with the finance minister said they welcomed the creation of the committee.

“I think the ministry wants to know the price of gasoline to make sure that petroleum companies are not overcharging,” said Hour Heng, vice president of the Cambodian fuel giant Sokimex.

“We accept the request of the ministry to control the price of gasoline and diesel,” he said. “It is an acceptable idea."

But they also pointed out that their pricing decisions were driven largely by international oil prices.

“We can’t predict future international oil prices and are not sure if the price of fuel in Cambodia will increase," Heng said, while Stephane Dion, managing director for Total Cambodge, wrote an email on June 5: “This is a simple question of supply and demand."

The government has already tried to curb the price of gasoline by not raising the tariff on imported fuel – a move that officials say will cost the government $300 million in uncollected tax revenue.

Diesel is currently taxed at $103 per ton, while the per ton tax on gasoline is $254.

Some one million tons of petroleum products, including gasoline and diesel, are imported each year into Cambodia, according to industry officials.

Even with this measure in place, fuel company officials say they are making very little money.

According to a senior official at Tela Kampuchea Company who did not want to be named, global oil costs have reduced the company's profits to about 200 riels per liter.

“We only make a little profit – many people do not know that," he said.