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Petrol smuggling plunges after Vietnam hikes prices

Petrol smuggling plunges after Vietnam hikes prices

14-story-1-copy.jpg
14-story-1-copy.jpg

Petroleum distributors breathe a sigh of relief as Vietnam cuts fuel subsidies, causing smuggling to drop dramatically

May titthara

Petrol smugglers at work in Svay Rieng province

PRICEY PETROL

Cambodia's petrol prices are higher than in

Vietnam, Thailand and Laos, which has fuelled a lucrative smuggling industry. Unlike its neighbours, Cambodia does not subsidise fuel or promote cheaper ethanol fuel through tax incentives.

PETROLEUM smuggling from Vietnam has plummeted, declining by about 80 percent since the Vietnamese government cut fuel subsidies in July,  according to Vietnamese state media.

Vietnamese petrol is consistently cheaper than Cambodia's due to state fuel subsidies, but the Vietnamese government cut the subsidies by about 30 percent in July, narrowing the price gap between the two countries.

Viet Nam News reported that the government had closed petrol stations near the Cambodian border and encouraged them to close early to prevent nighttime border runs.

Heu Heng, vice president of Sokimex, Cambodia's largest petroleum company, said Tuesday that he couldn't estimate how much petrol was being smuggled from Vietnam, but said that his business had been damaged by the illicit trade.

"It's very good that smuggling of petrol from Vietnam is falling because this has cost Sokimex millions of dollars in the past," Heu Heng said.

Sokimex used to sell about 10,000 tonnes of petrol a month in 2007, he said, but sales had halved this year.

A decline in smuggling would translate into higher sales this month, Heu Heng added, but he was unable to predict the level of the increase.

Sokimex controls a 20 to 30 percent market share in Cambodia, with the remainder split between about 11 companies, he noted.

Bin Many Mialia, a fuel industry analyst in Cambodia, also confirmed that petrol smuggling was decreasing, but he wasn't sure by how much.

"The biggest decreases have been for diesel. The drop hasn't been as great for gasoline," Bin Many Mialia said.

Cambodia's petroleum distributors have long complained about smuggling cutting into their profits.

"We have brought this up with the government many times, but there has been no action," said Bin Many Mialia, noting that smuggling was also a problem on the Thai-Cambodia border, with petrol also slightly cheaper in Thailand.

Opposition lawmaker Mu Sochua, meanwhile, said that provincial government officials had to share the blame for smuggling.

"It's not being done by small-time operators - there are provincial leaders involved," Mu Sochua said. "It affects the national budget, and the state is losing millions of dollars every day."

Yim Pheang, chief of the Chrey Thom customs office along the Cambodia-Vietnam border in Kandal province's  Koh Thom district, said that petrol smuggling through his jurisdiction had declined.

"We have been ordered by our superiors to prevent the smuggling," he said. "So far smuggling has declined," he said. "I estimate that 8,000-10,000 litres is smuggled through my area [every month]."

About 20,000 litres of fuel were confiscated last month, Yim Pheang noted.

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