WITH fitting American grandeur, the U.S.-owned petroleum giant Caltex opened its
first petrol station in Cambodia on 4 June since leaving the country before the collapse
of the Lon Nol regime over two decades ago.
As Buddhist monks blessed the pumps at the new filling station on USSR Blvd., U.S.
Ambassador Kenneth Quinn ceremoniously had his car serviced at the station. Quinn
promised this was merely the beginning of what will become a major U.S. presence
in the petroleum industry of Cambodia.
"This is more than an impressive station where you can buy petroleum products,"
Quinn said. "This is a sign of the political change in Cambodia."
Quinn said he hoped Caltex's initial $20 million investment will spark an increase
in American business presence here.
"Every American bussiness investor who drives by this station will receive a
message on the business opportunity here. It's a symbol of the stability and economic
opportunity in Cambodia."
In a nation where few people own cars, and other international corporations such
as Total and Shell battle for market share, Caltex will need continued political
stability to realize their investment.
Clifton Hon, chairman of Caltex in Singapore, said he expects Cambodia to experience
rapid growth in the coming years, much like other countries in the region have in
the past. "If the economy keeps moving in the proper direction there is tremendous
scope for investment," Hon said. "This is the start. We are hopeful there
will be an increase in demand."
Caltex estimates Cambodia presently uses about 11,000 barrels of crude a day, with
Phnom Penh accounting for up to 80 percent of this. If Cambodia stepped up its per
capita consumption rate to the same level as Indonesia, it would conceivably consume
48,000 barrels a day. If future consumption rises to South Korean levels, Cambodia
could use 470,000 barrels a day. By comparison, an area the size and population density
of Cambodia in the United States consumes a whopping 700,000 barrels a day, according
to Caltex's figures.
Caltex plans to compete aggressively for the Cambodian consumer's loyalty and capture
a 10 percent market share, said John Raeside, general manager of Caltex Cambodia
Limited. The company will market their product as a high quality gasoline, avoiding
a price war with some competitors who have been known to recalibrate their pumps
to give less petrol than is actually paid for or cut their product with kerosene.
"I'll be surprised if we don't build 20 (stations) in the next few years,"
The cornerstone of the Caltex investment is a $8 million marine depot in Sihanoukville
that will receive and store refined petroluem. Until the depot is finished, Raeside
said petrol will be shipped to Phnom Penh on small frieghters up the Mekong River
from export hubs in Thailand and Singapore.
The competition has said Caltex's ambitions and figures may be a bit optimistic in
a petroleum market that is near saturation. Andre Camp, general manager of the French
petroleum retailer Total Cambodge, estimated Cambodia consumes about 7,000 to 9,000
barrels a day.
Regardless of the figures, Camp said: "We welcome the competition," he
said. "We do not fear a competitor who uses the same weapons as we do."
Camp said the losers in the petroleum market will be smaller, local companies who
won't be able to compete price-wise unless they resort to watering-down their product
or cheating the consumer in other ways. "There are too many players already,"
he said. "(Caltex's opening) will be at the expense of the local distributors.
If they match the quality, then they must sell at a higher price than Total and Caltex."
Squeezing out the local competition raises the question of whether large foreign
investment is helping or hurting the Cambodian people. Caltex has announced a motorcycle
safety awareness program to encourage the use of crash helmets, but what the Cambodians
really need are well-paid positions within these corporations.
Caltex, a company that takes pride in hiring employees from the countries it operates
in, has trained and hired 20 Cambodian nationals, including two handicapped Khmers
who work at the Pochentong petrol station.
Sun Chantol, secretary general of the Council for the Development of Cambodia, said
although some local petrol dealers will be squashed by the large multi-national firms,
that loss will be outweighed by the benefits received by every petrol customer.