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Logo of Phnom Penh Post newspaper Phnom Penh Post - Petrol prices to drop sharply, or else: PM

Petrol prices to drop sharply, or else: PM

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081223_01.jpg

Prime Minister Hun Sen threatens to summon petroleum company heads, saying falling oil prices are not being reflected at the pump

Photo by:
Tracey Shelton

A Sokimex employee fills a motorbike with petrol at a station in Phnom Penh on Monday.

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.

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

"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." 

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