Ministries convene to tackle oil price hike

May Kunmakara / Khmer Times No Comments Share:
A sign shows prices for different types of gasoline at a gas station yesterday. KT/Mai Vireak

Officials from the Commerce, Economy and Finance, and Mines and Energy ministries are now working together to help those affected by the recent surge in gasoline prices across the country, a spokesman for the Ministry of Commerce said.

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With companies and consumers across the nation complaining about the recent hike in petrol prices – which have risen by 200 riels compared to the previous 10-day period – an inter-ministerial committee has been tasked with finding a solution that will satisfy everyone.

A meeting to discuss the situation has already been held, but little progress has been made so far, based on comments from Seang Thay, spokesman for the Ministry of Commerce.

“The three ministries have already meet to seek an appropriate response to the crisis,” he said. “However, we have not reached a consensus on what to do next.”

“We cannot say right now what we will do. We will continue observing the situation and planning a sensible response.”

Mr Thay explained that the goal of the committee assembled to deal with the situation is to mitigate the effect of the price surge on people’s living standards.

“We are not the only country in a tight spot. Many other nations across the world that are not oil producers find themselves in the same boat,” he said. “As a non-producing nation, crisis like this easily affect our retail prices.”

Following an increase in the global price of oil, the price of retail crude in Cambodia has risen over the past few months. From May 22 to June 1, regular gasoline sells at $1.06 per litre, while diesel costs $1.01.

These prices follow the government’s fuel pricing mechanism that recalculates retail fuel price caps every 10 days using a formula that aims to reflect changes in global oil prices.

Bin Many Mailia, deputy managing director of PTT, a Thai state-owned oil and gas company, told Khmer Times yesterday that the hike in the value of petrol is the direct result of US’s withdrawal from the Iranian nuclear deal and its ongoing trade spat with China.

“In my opinion the rise is caused by issues in the Middle East and the trade war between the US and China,” he said. “If nothing improves, the price will continue to go up over the next months.”

On Tuesday, a barrel of regular crude sold for $89.78 in Singapore, while diesel fetched $92.25 and super 95 cost $91.96 a barrel. Singapore is traditionally used as a benchmark for the region in terms of oil pricing.

Companies consulted by Khmer Times said the price hike is likely to affect the operation of their businesses.

Song Saran, president of Amru Rice, a leading rice miller and exporter, said the rise will affect costs in the industry as farmers now use more petrol-powered equipment than ever before.

“Most gas companies increase their prices immediately after they hear that the price of petrol is increasing. But this is not fair on us. We need at least a 60-day notice before prices are increased so that we can properly plan our shipments,” he said.

“Last week, the price of oil rose in the international market, and now they have already increased prices here. This is unfair, and we need proper legislation in place to protect consumers against this.”

Chou Ngeth, senior consultant at Emerging Markets Consulting, suggested the price-capping mechanism put in place by the government may not be efficient.

“I worry that the government’s price-setting mechanism does not respond to the needs of the public,” he said.

“A rise in the price of gasoline can disrupt national growth. The government should have put other mechanisms in place, such as reducing import tariffs,” he said, explaining that Thailand has a $1 billion fund it uses to subsidise petrol to ensure economic stability.

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