The retail prices of regular-grade petrol and diesel were respectively hiked by 10.4 per cent and 17.8 per cent on March 16, extending an uptrend that has held since January, and delivering a fresh blow to end consumers that jeopardises the livelihoods of low-income workers desperately trying to recover from the economic pains of Covid-19.
For the March 16-31 period, the retail selling prices of fuel in the Kingdom have been set at 5,300 riel or $1.32 per litre of both diesel and regular EA92 – petrol with an octane rating of at least 92, according to a Ministry of Commerce notice that contains values in both currencies.
This is the sixth bimonthly period in a row that these prices have been hiked. The corresponding rates for March 1-15 were 4,800 riel ($1.18) and 4,500 riel ($1.11) per litre of regular EA92 and diesel, respectively, up from 4,100 riel ($1.00) and 3,750 riel ($0.92) on December 16-31 – the most recent trough.
Compulsory for licensed filling stations, although usually not strictly enforced for street vendors, the pricing serves as a tool to facilitate and enhance cost control nationwide.
Rates are calculated semi-monthly by the ministry – once for the first 15 days of the month and again for the remainder – using data extrapolated from fluctuations in crude prices on the international market, and a number of taxes and charges adjusted based on feedback from meetings with local oil importers and other stakeholders.
Tide of complaints
The sharp jump in fuel prices has triggered a mounting tide of complaints, many of which take aim at rising transportation costs. On the other hand, some of the worst-affected people are in the transport businesses, and they are worried that they may lose much-needed income after having weathered a storm of economic losses brought on by Covid-19 over the past two years.
Sum Sivorn, a vendor at a local shop in the capital’s Phnom Penh Thmey commune, told The Post on March 16 that prices for all manner of goods have been on the rise during the uptrend in fuel rates, leading to discontented buyers and making it more difficult to make sales.
She added that a few days ago, a filling station that used to supply her with petrol for resale had decided to suspend the wholesale sale of fuel, out of fear of running out of stock.
“I turned to other stations looking to buy it, and they said the same thing, so I decided to stop selling petrol for a while – I’ll sell it again once [the price] goes down a bit,” she said.
Rith Phal, a motodop looking for a fare near Phsar Toch in Tuol Sangke I commune just north of the Chroy Changvar bridges, told The Post that the prices of daily necessities such as food and gas have gone up together with petrol, putting real pressure on his finances, as he struggles to pay rent, water, electricity and his children’s education.
“My expenses have been steadily rising, but my income has been declining due to a lack of commuters, while others prefer to ride Indian auto-rickshaws. I am very worried – if the price of fuel continues to rise like this, I fear I may not get enough money to cover the costs,” he said.
As for Sam Ath, who drives a share taxi to and from Phnom Penh and Tbong Khmum province, he explained that he used to make “five or six” round trips each week when the price of petrol was below 4,000 riel.
Since then, Ath noted that he has modified his vehicle’s engine to run on natural gas to save money on fuel in the long-term. But he admitted that he only makes two round trips a week now.
“Modifying the car to use gas may somewhat widen my profit margin, but the price of gas is also going up, though it’s a little cheaper than petrol,” he said.
Chan Sovann, based near the Wat Ounalom monastery near the riverside, has been ferrying passengers in a traditional style tuk-tuk for more than 10 years. He said he used to earn a generous sum by transporting foreign passengers.
But, he added, Covid-19 changed all of that as the number of international tourists cratered, which he said has robbed him of significant income and compelled him to turn to delivery services as more people opt to ride in auto-rickshaws, rather than the traditional motorbike-pulled carriages.
“But now with prices to move goods going up, people no longer want to ship things, but how could we not hike up our rates? If the price of petrol goes up, how would I make a profit if not by raising my rates?
“Petrol prices are too high, I barely want to do the job, but if I don’t do the work, I wouldn’t know what to do – I’ve but to just wait and see when petrol prices go down,” Sovann said, conveying a feeling of helplessness over his predicament.
Hong Vanak, director of International Economics at the Royal Academy of Cambodia, acknowledged the severity of these concerns, saying that the spiralling fuel prices have pushed up inflation, driven up transport rates and hampered the production industry, posing a myriad of difficulties, not only for the people, but for the government as well.
As a result, people’s livelihoods are at greater risk, despite the persistence of Covid-19 threats, he said.
“Intervention on oil prices is based on the capacity of each country’s government,” Vanak said, adding that although the retail fuel prices in Cambodia include a $0.04 reduction, “that intervention is still at a low level, so rates are still higher than in neighbouring countries”.
However, he elaborated, the government has spent a lot of money to curb the Covid-19 pandemic for more than two years, especially in the healthcare system as well as tourism, garments and other areas significantly affected by the crisis.
“Intervention in the price of oil would require a large package, and that depends on the ability of the state – not just one’s own perceptions. Still, I hope the government will not be indifferent to this,” Vanak said.
Multiple sources have reported that regular-grade petrol is being sold as high as 5,500 riel in the capital’s outskirts and in some provinces, and that several filling stations have run out of fuel.
Commerce ministry of Commerce spokesman Penn Sovicheat previously noted that the upswing in fuel prices was a global trend, driven by rising international oil rates. However, he said, his ministry will keep tabs on the situation, and hold a dialogue with the private sector if international oil prices would result in unbearable local fuel rates.
International crude prices soared after the Russia-Ukraine conflict began late last month, but have fallen back in the last few days, driven by optimism that talks between Moscow and Kyiv may somehow lead to a de-escalation, that Saudi Arabia and the UAE could boost crude output, and that oil demand from China could plunge due to fresh Covid-19 curbs in major cities.
At 1241 GMT on March 16, the May contract of Brent futures was at $100.24, up $0.33 or 0.33 per cent from its previous close, while US West Texas Intermediate (WTI) rose to $97.44, with the April contract up $1.00, or 1.04 per cent, according to Investing.com.
Both benchmarks broke new records on March 7 with Brent reaching $139.13, marking the highest price since July 16, 2008, and WTI hitting $130.50 a barrel, the highest level since July 22, 2008, data from the financial markets platform indicate.
But analysts have not ruled out that oil prices can surpass their all-time peaks set on July 11, 2008 – $147.50 for Brent and $147.27 for WTI.
The ministry notice shows that the current semi-monthly regular EA92 rate was calculated by adding the $0.8145 average Means of Platts Singapore (MOPS) over March 1-15, $0.1847 in taxes and associated charges ($0.0635 in customs duty, $0.0200 in additional fees and $0.1013 in special fees) and $0.20 premium – summing up to about $1.199 – plus an extra 10 per cent surcharge on top of that for a total of $1.3192 or 5,320 riel, which were then adjusted to their final values.
Similarly, the diesel rate was computed from a $0.8924 mean MOPS (over the same 11 working days), $0.0742 in taxes and associated charges ($0.0000 in customs duty, $0.0400 in additional fees and $0.0342 in special fees) and $0.23 premium – tallying up to around $1.197 – with a 10 per cent surcharge for a sum of $1.3163 or 5,309 riel, which were then rounded to their current values.
And as has been customary since July 2018, the notice mentioned that the two current per-litre rates include a $0.04 reduction approved by Prime Minister Hun Sen “to ease the people’s livelihoods”.