Cambodia's main 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 match the fall in global prices.
The lower costs decided at a meeting held by the Ministry of Economy and Finance on Friday, following a call by Prime Minister Hun Sen for a reduction in costs.
"We reached our goal," Finance Minister Keat Chhon said Friday. "From Monday on, oil companies will reduce the fuel price 100 riel per liter. So it will be reduced from 5,000 or 4,900 riel," about $1.25.
Fuel prices directly affect many Cambodians, but the prices are also a driving factor in high inflation in recent months.
On Saturday, global crude oil was at $104 a barrel, down 30 percent from its highest point, $147. But Cambodia's fuel costs have only decreased about 10 percent from their highest prices, which matched the global surge.
"Our fuel price doesn't equal other markets," said Chap Sotharith, an economist at the Cambodian Institute for Cooperation and Peace. The global price "already had a 30 percent decrease, but ours has decreased only 10 percent."
A decrease of 30 percent in Cambodia would mean prices as low as 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.
Cambodia has at least seven local and foreign fuel importers, but most of them before Friday had been reluctant to lower costs.
Asked Friday whether the cost could be lowered more, Seng Chhung Ly, chief of retail network for France's Total, said, "I don't know. We have to wait and see together."
Critics say the price in Cambodia stays high because the major fuel companies cooperate to keep prices inflated.
"The situation in Cambodia seems to be one of the underdog against oil companies," said Chan Sophal, president of the Cambodian Economic Association. "The four or five companies together limit the price to look like only one. In this situation, the consumers are the losers and the sellers are the winners."
Keat Chhon dismissed such criticisms, saying that during a period when global oil prices rose 80 percent, Cambodia's prices rose only 40 percent.
Meanwhile, he said, the government has subsidized fuel costs more than $260 million since January and plans to spend another $30 million a month through the end of the year.