The government has increased retail fuel prices for the fourth bimonthly period in a row, as oil climbs towards $100 per barrel – a trend that has devastated the transport and private-hire sectors and other major petrol consumers ravaged by Covid-induced revenue losses for more than two years.
The retail selling prices of fuel in the Kingdom from February 16-28 have been set at 4,700 riel or $1.16 per litre of regular EA92 – petrol with an octane rating of at least 92 – and 4,450 riel or $1.09 per litre of diesel, the Ministry of Commerce said in a notice that contains values in both currencies.
The corresponding rates for February 1-15 were 4,500 riel ($1.11) and 4,250 riel ($1.05) per litre of regular EA92 and diesel, respectively, up from 4,350 riel ($1.07) and 4,050 riel ($0.99) in January 16-31.
They had been set at 4,100 riel ($1.00) and 3,750 riel ($0.92) for December 16-31, bottoming out at 9.89 and 8.54 per cent lower – in terms of the local currency – than a peak of 4,550 riel ($1.11) and 4,100 riel ($1.01) in November 1-15.
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 and is calculated semi-monthly by the ministry, using data extrapolated from fluctuations in crude prices on the international market and feedback from meetings with local oil importers and other relevant parties.
The relentless rise in prices is pushing up transportation costs, fuelling discontent among motorists and motorcyclists, especially those involved in trades such as delivery and ride-for-hire services.
The Post caught up with Chan Samoeun, a motodop in search of a customer near Tuol Sangke Market in northern Phnom Penh, who indicated that the petrol price hikes have ramped up his business expenses, while his earnings largely remain the same.
Samoeun said that back when rates were more stable, he’d be able to squeeze 40,000-50,000 riel ($10-$12.50) in profit a day after paying for petrol. But, he noted, daily earnings have nearly halved in the last months due to a dip in passengers, on the back of resurfacing Covid fears, forcing his family of five to tighten their belts.
“I’m not exactly sure why petrol prices have steadily climbed up like this, but if this keeps up, I may have to find a job in construction. Today’s petrol price is very high, although fares are around the same, and few are travelling, owing to Covid-19 concerns.
“I have to support my wife and three children, all of whom are still in school. I have to pay for food, rent on a house, water, electricity – and if I earn a meagre 20,000-30,000 a day, what hope do I have?” he asked.
Soeun Sopheap, a tuk-tuk driver looking for a fare near the entrance to the same market, shared that the gas-powered three-wheeled auto rickshaw has become a more popular vehicle for hire than the traditional two-wheeled carriage pulled behind a motorbike, which he noted is petrol-fuelled and suitable for carrying loads of fruits, vegetables and other goods.
“If petrol keeps going up to such a degree, I don’t know if I’d be able to manage these costs or not, nowadays I’m moving just small loads of goods. Fortunately I don’t live in a rental unit and merely sleep in my tuk-tuk every night. If I didn’t, I’d have no clue where to get the money to send my wife and kids out in the countryside,” he said.
Just south of the market at the Chroy Changvar roundabout, Vannde, a taxi driver who has been in the business for almost a decade, said he regularly ferries people and goods to and from the capital and Kampong Cham, although now in the Covid-era some days he is forced to make the trip alone.
“Some days I take off with an empty car – no passengers – and on some of those, I haul just a small amount of cargo. With rates soaring like this, it seems I may have no choice but to leave the trade for a bit, go work the fields, and wait for the price of petrol to cool off a bit – only then would it be feasible to resume,” he said.
Cambodia Logistics Association (CLA) president Sin Chanthy told The Post that rising fuel prices were not only a challenge for the transport sector, but also for the general public.
However, he emphasised that although fuel prices have risen, the transport rates charged by the association’s members have not been hiked to compensate, a choice he said is chipping away at profits.
Royal Academy of Cambodia economics researcher Ky Sereyvath said that in theory as well as in practice, the government can intervene in market issues, depending on the state budget.
If the state believes that it can implement intervention measures able to stem soaring fuel prices, it could disburse the required funds, he said, suggesting as possibilities a reduction in import tax rates for crude oil products, or merely setting retail petrol and diesel rates lower.
Either way, the economist acknowledged that this would result in losses for the national budget. “If the government lowers taxes on oil imports, that would provide an opportunity for private companies to import more, but that’d lead to a loss in national revenue,” he said.
Ministry of Commerce spokesman Pen Sovicheat told The Post that 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 prices.
He noted that the prime minister a few years back approved a $0.04 per-litre subsidy on fuel that is factored into the price for each bimonthly period, and added that the ministry would be willing to introduce additional relief measures.
“We’ll be prepared to find ways to make things easier, which the private sector can embrace in some measure, and for the people to be able to use fuel to a reasonable extent,” he said.
As an oil importer, Cambodia cannot avoid problems stemming from fluctuations of international prices, he added. “When international oil prices rise, they must necessarily rise here as well. Be that as it may, this uptrend in rates is not limited to Cambodia, but also occurs in all oil-importing countries, such as Thailand and Vietnam.”
In the global oil commodity trade, Brent futures had gained $1.22, or 1.31 per cent, to $94.50 a barrel at 1216 GMT on February 16, while US West Texas Intermediate (WTI) crude had piled on $1.10, or 1.19 per cent, reaching $93.17,according to Investing.com.
Both Brent and WTI reached their highest levels since 2014 on February 14, respectively at $96.78 and $95.82 a barrel, data from the financial markets platform indicate.
The ministry notice shows that the current semi-monthly regular EA92 rate was calculated by adding the $0.6703 average Means of Platts Singapore (MOPS) over February 3-15, $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 $1.055 – plus an extra 10 per cent surcharge on top of that for a total of $1.1604 or 4,720 riel, which were then adjusted to their final values.
Similarly, the diesel rate was computed from a $0.6881 mean MOPS (over the same nine 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 $0.992 – with a 10 per cent fuel surcharge for a sum of $1.0915 or 4,439 riel, which were then rounded to their current values.