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Petrol companies slammed

Content image - 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

Photo by: Tracey Shelton

A supply truck pulling into a Sokimex station in Siem Reap. Sokimex is Cambodia's largest petroleum supplier.

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." 

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