Logo of Phnom Penh Post newspaper Phnom Penh Post - Record-high fuel prices defy oil's drop

Record-high fuel prices defy oil's drop

Record-high fuel prices defy oil's drop

As other countries enjoy the cheapest gasoline prices since 1991, economists and

the opposition are demanding to know why the price for petrol in Cambodia remains

a record $1 per liter.

By November 2, the price for of crude oil had fallen to roughly $57 a barrel, a slide

of more than 25 percent from a mid-July peak of $78.50, according to industry reports.

In neighboring Vietnam and Thailand, the plummeting price has meant relief for motorists

as the lower price has been passed on to the consumer.

The standard industry procedure is to adjust retail prices according to the fluctuations

of crude oil price on the international market, according to Sok Hach, dirctor of

the Economic Institute of Cambodia (EIC).

"Last year, when the international crude oil price was $60 for one barrel, the

gasoline price in Cambodia was 3,800 riel per liter," Hach told the Post on

November 2. "But now it [the international crude oil price] has fallen below

$60 per barrel and the gasoline price in Cambodia has not fallen to 3,800 riel per

liter - it remains between 4,100 to 4,200 riel per liter."

Currently in the United States, the price for a liter of regular petrol is between

$0.52 and $0.59 (2,200 riel to 2400 riel). In Vietnam a liter of petrol is down to

about 2,600 per liter and in Thailand roughly 2,800 riel.

According to opposition leader Sam Rainsy, the petrol prices have not changed in

Cambodia in three-and-a-half months. Now he's written to government demanding an

explanation, and alleging that the real reason is high-level corruption.

"There are two types of gasoline companies in Cambodia - Cambodian-owned and

foreign-owned," Rainsy said. "The Cambodian firms are owned by powerful

people and family members of the top leaders of the country and their business associates.

They benefit from tax exemption and use their political power to influence the economy

and to import gas and petrol products without paying taxes and customs duties."

Tela Petroleum Group Investment Company Ltd and Sokimex, or Sok Kong Import Export

Company Ltd, are Cambodian-owned gasoline companies. Sokimex is owned by tycoon and

former Phnom Penh Chamber of Commerce president Sok Kong, a longtime Hun Sen ally.

Tela is allegedly owned by family members of the highest officials in the CPP regime.

On November 2, the price of a liter of petrol at Tela was between 4,100 to 4,200

riel per liter.

"[The Cambodian owned companies] are making huge profits," Rainsy said.

"They don't pay tax to the state, but they charge 1,000 riel of tax on every

liter they sell and keep it for themselves. Also, they keep the retail price at the

same level while the cost of purchasing goes down. They are bleeding the consumer."

Rainsy said that during his tenure as Minister of Finance between 1992 and 1993 there

were roughly 10,000 cars registered cars in the country and Cambodia imported about

100,000 tons of petrol each year.

"Now, 13 years later there are 10 times more cars. There must be 100,000 cars

or more, and yet the official amount of imported gas is still 100,000 tons,"

he said. "There is a big discrepancy between the increase in cars and the volume

of gas imported over the last 10 to 15 years. I think nine-tenths of the gasoline

imported into Cambodia is being smuggled."

An official at the Ministry of Commerce (MoC), who asked not to be named, said the

Cambodian government has charged the same tax on gasoline and diesel since 1993.

He said the government currently charges $344.55 in tax for every imported ton of

gasoline and $144.15 per ton of diesel. According to the MoC official, one ton of

oil costs a petrol company between $615 and $630 to purchase and import into Cambodia

and $700 to $730 for diesel.

"The price of gasoline is high in Cambodia, and it may be because the supply

is not equal or other factors," he said.

Citing figures from Cambodian customs authorities, the MoC official said in 2005

Cambodia imported 19,780 tons of gasoline and diesel. But according to his research,

Cambodia consumes about 360,000 tons each year. He said more than 10,000 tons of

gasoline are smuggled from into Cambodia from Vietnam and Thailand each month.

"We should not confuse the small smugglers who do it on the back of a motorbike

to make a few extra dollars each month, with the people who use tankers and trucks,"

Rainsy said. "Sokimex, Tela, powerful people and even the army are using the

private port at Ream. They deliver oil to the military base at Ream in Sihanoukville.

They pay no customs and no duty and it is the army that is importing it directly.

It's totally dark. There is no explanation."

Chea Sovanna, 28, a motodop driver, said the continuously high price of gasoline

is reducing his family's living standard every day. Sovanna said he makes between

1,000 to 2,000 riel per paying for gasoline.

"Every day I almost get no profit from driving as a motodop because I nearly

spend all the money I earn on buying gasoline and my customers still offer me the

same price even though the gasoline price is high," Sovanna said. "I wonder

why our country is different from others [keeping gasoline price high]?"


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