Logo of Phnom Penh Post newspaper Phnom Penh Post - Timber baron branches into fuel

Timber baron branches into fuel

Petrol transport trucks sit in Preah Vihear province late last week during a ceremony to mark the opening of Try Pheap’s PAPA Petroleum. Facebook
Petrol transport trucks sit in Preah Vihear province late last week during a ceremony to mark the opening of Try Pheap’s PAPA Petroleum. Facebook

Timber baron branches into fuel

Timber baron Try Pheap, who has previously been accused of running large-scale illegal timber operations in protected forest areas and making millions off the Kingdom’s natural resources, held a ribbon-cutting ceremony last Friday to launch a new business venture, PAPA Petroleum Co Ltd.

The new energy company is the latest addition to the tycoon’s eponymous Try Pheap Group Co Ltd, whose subsidiaries are engaged in logging, agriculture, tourism and the development of industrial parks.

PAPA Petroleum will import fuel products from the Thailand-based supplier AEC Energy Co Ltd in accordance with a memorandum of understanding between the two companies signed in February.

The fuel will be distributed using at least a dozen large Chinese tanker trucks, according to the group’s Facebook page, while the group’s website lists four fuelling stations spread across the Kingdom. A company representative contacted yesterday declined to comment on the size and scale of the company, citing that it was a new venture and that he was unaware of its specific details.

According to Dith Tina, secretary of state at the Ministry of Mines and Energy (MME), PAPA Petroleum has “permission” to import fuel, but has not yet received a licence.

“The company has received permission [not a licence] for imports since February,” he said in an email, adding that the company will primarily source gasoline and diesel from Thailand.

But despite PAPA Petroleum claiming to have built four retail petrol stations, Tina said his ministry had not yet received an application from the company to operate retail activities. Until this is approved, the company will only legally be able to sell its products to other petrol retailers.

“So, the impact on consumers is indirect, but at least they will offer another choice for retailers,” Tina said.

Soeng Sophary, spokesperson for the Ministry of Commerce, confirmed that PAPA Petroleum has been registered with the ministry for nearly a year, and that the government granted the company a 10-year licence to build and operate two fuel depots.

“Generally, if there are more providers in this sector, it will be good for the consumers as it brings about more choices and a wider range of qualities in the market at competitive prices,” she said.

Bin Many Mialia, marketing division manager for Thai Oil’s PTT (Cambodia), which is planning to triple the number of petrol stations it operates in Cambodia by 2020, said that the oil giant was unfazed by the entrance of well-connected player in the Kingdom’s energy sector.

“The target market for PTT is the premium customer looking for gasoline and class-A diesel products,” he said. “I do not think that PAPA will be able to cater to that type of consumer.”

While Mialia admitted that there was room in the petroleum industry to grow, he stressed that the new company must make sure it follows government regulations and operates transparently while abiding by the Ministry of Commerce’s fuel-pricing mechanism.

“The most important part is that the company needs to be transparent and must pay all the taxes like other companies in Cambodia,” he said.

Pheap has frequently been accused of operating outside regulations. In 2014, the Post revealed how the influential tycoon allegedly made upwards of $310 million from illegally felling luxury timber between 2009 and 2014.

PAPA Petroleum is the latest step in Try Pheap Group’s effort to diversify its operations. The company recently announced a partnership with Hong Kong’s Hutchison Port Holdings to construct a $300 million port in Kampot province, and in May signed an agreement with a Chinese company to import conditioning units.

Preap Kol, executive director of Transparency International Cambodia, said that as the timber industry “has recently come under an increased scrutiny due to public condemnation and the government’s measures”, the company was likely seeking out more “prominent and visible” ventures.

Kim Natacha, executive director of the NGO Cambodians for Resource Revenue Transparency, said Cambodians are becoming increasingly concerned about where their money is going.

“Try Pheap should disclose the company’s profit margins and import costs so that consumers can decide which gasoline company they want to use and which provides the best products,” she said.

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