Increase in world oil price well above $50 a barrel impacts on Cambodian fuel – all of which has to be imported – with further price rises expected
Photo by: Tracey Shelton
Pump attendants work at a garage in Phnom Penh in this file photo.
PETROL prices in Phnom Penh have jumped by up to 200 riels (4.8 US cents) per litre in the past week, with petrol companies and analysts saying motorists should expect further increases as global petrol prices continue to have a knock-on effect at the petrol pump.
Since February, international prices for crude oil jumped from a year low of US$45 to $58 per barrel - a rise of nearly 30 percent.
With Cambodia still importing 100 percent of its oil products, the country remains susceptible to global market fluctuations, according to oil analyst Bin May Mialia. But although stockpiled, low-cost oil derivatives had so far helped offset the sharp rise in global crude oil, petrol prices were expected to increase as these reserves were depleted.
"We have seen an increase of only about 100 or 200 riels because we can mix newly imported gasoline with what we have in storage, but prices could increase higher if they keep importing the newly priced oil," he said. "Even if the price remains stable at $58 next week, you might see price of gasoline and diesel increase by 200 or 300 riels more."
Heu Heng, deputy director general for Cambodian petrol giant Sokimex, said his company had increased prices by 50 riels per litre at the pump, to around 3,400 riels for "gold" grade gasoline.
"It is normal that when the price of international crude oil increases, we increase our prices, too, because we import everything from outside," he said. "We cannot predict the international oil price, but when it is down we will drop down as well."
According to government statistics, retail prices for gasoline increased from 2,950 to 3,350 riels per litre last week - an increase of over 13 percent - while diesel rose from 2,850 to 2,950 riels over the same period.
We can mix newly-imported gasoline with what we have in storage.
But Rong Chhun, president of the Cambodian Independent Teachers Association, which has lobbied the government to introduce fuel subsidies, told the Post that high petrol costs were a result of price gouging by distributors, and called on the government to monitor pump prices to ensure they remain fair for Cambodians.
"Prime Minister Hun Sen appealed often to private companies to lower the price of gasoline, but it only works for a short time," he said. "As prime minister of the country, [he] has to issue a strong order to private companies. Even if there is a free-market policy, it still needs to be managed by the government."
Sam Rainsy Party lawmaker Yim Sovann said the price increase was a result of of the retail petrol sector operating as a cartel, and that the biggest petrol retailers have "formed a team" to set artificial prices. He said Cambodia also taxed gasoline at the rate of 1,000 riels per litre, and called on the government to abolish the tax - a measure that would benefit economic development as well as the poor.
"The high price of gasoline and diesel will drive out investors from Cambodia, and we will face challenges from competitors," he said. "I think investors and people are both facing the same problem once goods prices increase and lead people into poverty."