Fuel Importers Agree To Nudge Prices Down
Economists say a small decrease agreed upon by fuel companies does not match a global dip in oil prices. (22 September 2008)
Cambodia'smain fuel import companies have agreed to reduce the price of fuel by 100 riel,about $0.02, per liter, but economists said last week the decrease doesn't matchthe fall in global prices. The lower costs decided at a meeting held by the Ministry ofEconomy and Finance on Friday, following a call by Prime Minister Hun Sen for areduction in costs. "We reached our goal," Finance Minister Keat Chhon saidFriday. "From Monday on, oil companies will reduce the fuel price 100 riel perliter. So it will be reduced from 5,000 or 4,900 riel," about $1.25. Fuel prices directly affect many Cambodians, but the pricesare also a driving factor in high inflation in recent months. On Saturday, global crude oil was at $104 a barrel, down 30percent from its highest point, $147. But Cambodia's fuel costs have onlydecreased about 10 percent from their highest prices, which matched the globalsurge. "Our fuel price doesn't equal other markets," said ChapSotharith, an economist at the Cambodian Institute for Cooperation and Peace.The global price "already had a 30 percent decrease, but ours has decreasedonly 10 percent." A decrease of 30 percent in Cambodia would mean prices as lowas 3,800 riel, or $1.90, said Sok Sina, an independent economist. Chhun Oun, managing director of the fuel company Tela,disagreed, saying the current Cambodian prices already match global prices. Cambodiahas at least seven local and foreign fuel importers, but most of them beforeFriday had been reluctant to lower costs. Asked Friday whether the cost could be lowered more, SengChhung Ly, chief of retail network for France's Total, said, "I don'tknow. We have to wait and see together." Critics say the price in Cambodia stays high because themajor fuel companies cooperate to keep prices inflated. "The situation in Cambodia seems to be one of theunderdog against oil companies," said Chan Sophal, president of the CambodianEconomic Association. "The four or five companies together limit the price tolook like only one. In this situation, the consumers are the losers and thesellers are the winners." Keat Chhon dismissed such criticisms, saying that during aperiod when global oil prices rose 80 percent, Cambodia's prices rose only 40percent. Meanwhile, he said, the government has subsidized fuel costsmore than $260 million since January and plans to spend another $30 million amonth through the end of the year.