Nearly four months after the Ministry of Commerce implemented a fuel-pricing mechanism that lowered prices at the pump to reflect the fall in the global commodity last March, petrol prices have inched back up to pre-intervention levels.
Prices in early June are now back up to the same level before the government stepped in and intervened after a drawn-out two-month negotiation process brought the Kingdom’s oil importers to the table.
As consumers continue to criticise the regular 10-day hikes of fuel prices, the government has stood by the pricing mechanism, saying that it adequately represents global oil fluctuations.
According to the announcement from Ministry of Commerce, prices at the pump until June 11 are set at a maximum of 3,550 riel per litre for premium while regular petrol is fixed at 3,450 riel. Diesel costs 3,100 riel per litre.
Pen Sovicheat, director of domestic trade at the Ministry of Commerce, explained that the formula to determine price is based on the average Means of Platts Singapore (MOPS) benchmark, which also is adjusted for local customs fees, operating costs and value-added tax (VAT). He said the incremental rise in fuel prices over the last four months showed that the mechanism was achieving the desired results.
“Nothing has changed [for the mechanism] and prices have increased according to the international market,” he said, adding that as the price rises in Singapore, Cambodian prices would fluctuate. “The formula is transparent.”
Until this month, the fuel mechanism had consistently raised prices every 10 days at a rate of $0.3374 for premium while regular and diesel were capped at $0.3174 and $0.2927, respectively. However the June data for MOPS showed per litre increases of $0.3850 for premium, $0.3665 for regular and $0.3601 for diesel.
As prices are now back to pre-intervention levels, consumers have taken to social media to criticise and question the government’s pricing mechanism.
Tuk-tuk driver Sun Ra raised concerns about the increases as he regularly consumes nearly 4 litres of petrol per day.
“I appeal to the government to prevent more increases,” he said. “It is good to keep it below 3,000 riel per litre.”
Teng Delux, a lecturer of economics at a university Phnom Penh, said the government’s price mechanism was balanced and had helped to keep fuel prices reasonable. He added that when fuel was around 3,000 riel per litre, global crude prices hovered around $32 per barrel. Now, crude oil was nearly $50 per barrel.
“Without intervention, I think consumers would be paying higher than what they are now,” he said.
Cambodia imports between 1.5 million and 2 million tonnes of petrol and diesel annually. It is estimated that up to 5 to 7 million litres of fuel products are consumed daily.