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Caltex heralded as "sign of political change"

Caltex heralded as "sign of political change"

WITH fitting American grandeur, the U.S.-owned petroleum giant Caltex opened its

first petrol station in Cambodia on 4 June since leaving the country before the collapse

of the Lon Nol regime over two decades ago.

As Buddhist monks blessed the pumps at the new filling station on USSR Blvd., U.S.

Ambassador Kenneth Quinn ceremoniously had his car serviced at the station. Quinn

promised this was merely the beginning of what will become a major U.S. presence

in the petroleum industry of Cambodia.

"This is more than an impressive station where you can buy petroleum products,"

Quinn said. "This is a sign of the political change in Cambodia."

Quinn said he hoped Caltex's initial $20 million investment will spark an increase

in American business presence here.

"Every American bussiness investor who drives by this station will receive a

message on the business opportunity here. It's a symbol of the stability and economic

opportunity in Cambodia."

In a nation where few people own cars, and other international corporations such

as Total and Shell battle for market share, Caltex will need continued political

stability to realize their investment.

Clifton Hon, chairman of Caltex in Singapore, said he expects Cambodia to experience

rapid growth in the coming years, much like other countries in the region have in

the past. "If the economy keeps moving in the proper direction there is tremendous

scope for investment," Hon said. "This is the start. We are hopeful there

will be an increase in demand."

Caltex estimates Cambodia presently uses about 11,000 barrels of crude a day, with

Phnom Penh accounting for up to 80 percent of this. If Cambodia stepped up its per

capita consumption rate to the same level as Indonesia, it would conceivably consume

48,000 barrels a day. If future consumption rises to South Korean levels, Cambodia

could use 470,000 barrels a day. By comparison, an area the size and population density

of Cambodia in the United States consumes a whopping 700,000 barrels a day, according

to Caltex's figures.

Caltex plans to compete aggressively for the Cambodian consumer's loyalty and capture

a 10 percent market share, said John Raeside, general manager of Caltex Cambodia

Limited. The company will market their product as a high quality gasoline, avoiding

a price war with some competitors who have been known to recalibrate their pumps

to give less petrol than is actually paid for or cut their product with kerosene.

"I'll be surprised if we don't build 20 (stations) in the next few years,"

Raeside said.

The cornerstone of the Caltex investment is a $8 million marine depot in Sihanoukville

that will receive and store refined petroluem. Until the depot is finished, Raeside

said petrol will be shipped to Phnom Penh on small frieghters up the Mekong River

from export hubs in Thailand and Singapore.

The competition has said Caltex's ambitions and figures may be a bit optimistic in

a petroleum market that is near saturation. Andre Camp, general manager of the French

petroleum retailer Total Cambodge, estimated Cambodia consumes about 7,000 to 9,000

barrels a day.

Regardless of the figures, Camp said: "We welcome the competition," he

said. "We do not fear a competitor who uses the same weapons as we do."

Camp said the losers in the petroleum market will be smaller, local companies who

won't be able to compete price-wise unless they resort to watering-down their product

or cheating the consumer in other ways. "There are too many players already,"

he said. "(Caltex's opening) will be at the expense of the local distributors.

If they match the quality, then they must sell at a higher price than Total and Caltex."

Squeezing out the local competition raises the question of whether large foreign

investment is helping or hurting the Cambodian people. Caltex has announced a motorcycle

safety awareness program to encourage the use of crash helmets, but what the Cambodians

really need are well-paid positions within these corporations.

Caltex, a company that takes pride in hiring employees from the countries it operates

in, has trained and hired 20 Cambodian nationals, including two handicapped Khmers

who work at the Pochentong petrol station.

Sun Chantol, secretary general of the Council for the Development of Cambodia, said

although some local petrol dealers will be squashed by the large multi-national firms,

that loss will be outweighed by the benefits received by every petrol customer.

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