The prices of gasoline and diesel will increase January 1, according to a prakas

from the Ministry of Economy and Finance. The order, dated November 23, stated that

import duty on diesel would increase 4 cents (160 riel) a liter, and that on gasoline

by 2 cents (80 riel).

"We'll have to eventually pass the additional cost on to the consumers,"

said a Caltex official, adding that the company would maintain retail prices at the

pump until current stocks ran out. Most companies maintain 15 days stock.

While the increase should have little impact on individual vehicle owners, bulk consumers

like industrial houses, transport companies and some government ventures could use

it as an excuse to raise tariffs, setting off a chain of marginal increases in costs

of goods and services.

"But [they should] have no reason to do that," said a senior Shell official,

speaking anonymously. "After all, distributors in Cambodia twice brought down

the retail prices of both diesel and gasoline by two cents each during October and

November."

That decrease followed a drop in the global price of oil and petroleum products.

The oil companies reduced the pump price by 2 cents October 17 and by another 2 cents

November 19.

"The raise would, therefore, merely neutralize that benefit and bulk users should

be able to absorb the additional expense," the Shell official said when queried

about the impact of the development.

The prakas, signed by Minister of Finance Keat Chhon, stated the additional import

duty was levied in compliance with the urgent need for enhancing the effectiveness

and collection of revenue from taxes and duties. The additional revenue collected

by the customs and excise office of the Kingdom of Cambodia, the prakas further added,

would be recorded under the government's budgetary revenue.

The announcement of higher levies did not overly concern the large petroleum companies.

They told the Post that they were more concerned at the large-scale smuggling of

gasoline, diesel and lubricants, which cut into their market share and caused them

to lose revenue.

"Since the smugglers do not have to pay any government taxes or duties, they

manage to capture a large share of our market by illegally supplying fuel to bulk

consumers at a much cheaper rate," said one company official.

Though industry leaders have been pressuring the government to put a stop to the

practice "which should also increase the government revenue", there has

been no let up in smuggled petroleum.