Logo of Phnom Penh Post newspaper Phnom Penh Post - Cost of petrol dips as price caps take effect

Cost of petrol dips as price caps take effect

Current fuel prices are displayed in front of a Caltex petrol station yesterday in Phnom Penh.
Current fuel prices are displayed in front of a Caltex petrol station yesterday in Phnom Penh. Heng Chivoan

Cost of petrol dips as price caps take effect

Prices at the pumps dropped yesterday as the government’s fuel-pricing formula came into effect, with the country’s major petrol retailers advertising regular gasoline at 3,050 riel per litre, premium at 3,150 riel per litre and diesel at 2,700 riel per litre, in accordance with government-mandated price caps.

Yesterday marked the first day since the Ministry of Commerce announced the new price ceilings, which are calculated according to a formula based on the average Means of Platts Singapore (MOPS) benchmark, adding in taxes, VAT and local operating costs.

The government adopted the fuel-pricing mechanism last week with the consent of all major petroleum distributors operating in the Kingdom, ending a months-long effort to create a flexible pricing mechanism that would make local petrol prices responsive to changes in global oil prices.

Bin Many Mialia, marketing division manager for PTT (Cambodia), said the new price caps required PTT and its chief competitors to drop their prices an equal amount to a government-set level.

“It has affected our business a bit, but it is acceptable,” he said. “If we didn’t agree with it, there would be no solution for the pricing mechanism.”

The Commerce Ministry has said that it will recalculate the price ceilings every 10 days, namely on the 1st, 11th and 21st of the month.

Mialia said he expects the next review would see prices inch up again if global oil prices have bottomed out, as many analysts predict.

He added that despite yesterday’s price drop, he does not expect the company to sell more gas as price-conscious consumers tend to purchase cheap petroleum smuggled in from abroad.

“Some companies sell lower than this price cap,” he noted. “We don’t mind, but the question is how the government will deal with it.”

Um Vuthdara, a lecturer in the Faculty of Economics at Pannasastra University, said lower fuel costs should help reduce consumers’ expenses, which could improve the standard of living.

While this will make people happy, he said the mechanism should not be considered a long-term solution, as according to free market principles the government should not intervene in pricing.

That said, he conceded that “if the government didn’t set the policy, gasoline prices would not have decreased”.

Tuk-tuk driver Doung Thouk was relieved to see the price of regular gasoline drop by over 5 per cent this week, but called for a further decline to ease the burden of growing living expenses.

“I want the price to fall even further because our income is still low and irregular while price of other products in the market continues to get expensive,” he said.

According to a prakas issued on March 9, petroleum retailers found selling gasoline at prices above the cap will be fined $1,000 for the first violation. Repeat offenders will be ordered temporarily shut.

MOST VIEWED

  • Rainsy lands in Malaysia

    Cambodian opposition figure Sam Rainsy arrived in Kuala Lumpur airport on Saturday afternoon after boarding a flight from Paris, where he has been living for more than four years. Ministry of Foreign Affairs and International Cooperation spokesperson Koy Kuong said on Saturday that Cambodia respected

  • Touch: Rainsy will never return

    Sam Rainsy, the “acting president” of the Supreme Court-dissolved Cambodia National Rescue Party (CNRP), has claimed it has achieved 70 per cent of its struggle to find a solution to the current political situation in the Kingdom. Just before boarding a plane at Charles de Gaulle

  • Sokha continues call for dropping of charge after bail conditions reduced

    Not satisfied with having his bail conditions reduced, allowing him to travel freely in Cambodia, Kem Sokha says he wants his charge totally dropped. “As an innocent man who has been in detention for two years even without being found guilty, I continue to demand

  • MEPs' call for Rainsy's safety not European Parliament position

    The European Parliament said on Friday that a statement by 56 Members of the European Parliament (MEPs) calling for guarantees of Sam Rainsy’s freedom and safety should he return to Cambodia did not represent its position. Delphine Colard, the European Parliament’s press officer told

  • Sar Kheng: Rainsy return not blocked

    Minister of Interior Sar Kheng clarified that Cambodia had never blocked Sam Rainsy from returning to the Kingdom. However, he said Cambodia reserved the right to take legal action as allowed by law against activities aimed at destroying the Kingdom. “No one blocked the return

  • Cambodia celebrates 66th Independence Day

    Cambodia on Saturday celebrated Independence Day to mark the end of French colonial rule under the leadership of King Father Norodom Sihanouk in 1953. Thousands of people from all walks of life watched King Norodom Sihamoni light the victory flame at Independence Monument to mark the 66