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At Fuel Pumps, Price and Quality Are Anybody’s Guess

A vendor's wife fills up a two-littre bottle with gasoline for sale at a roadside stall in Phnom Penh, file photo.
A vendor's wife fills up a two-littre bottle with gasoline for sale at a roadside stall in Phnom Penh, file photo.
PHNOM PENH - Cambodia imports all of its fuel from abroad, but little regulation in the sector means everyday Cambodians see all kinds of prices at the pumps. Prices are high in Phnom Penh, while sometimes cheaper on the outskirts of the capital and even cheaper in the countryside. And they can be different from station to station, even on the same stretch of road.

Drivers say they have to know who is watering down the fuel and who isn’t, while they juggle any number of sales incentives and free give-aways from gas stations.

Meanwhile, the government has to contend with illegal fuel smuggling, inconsistent fuel quality and high prices that are adding to the already high cost of living for many Cambodians.

The price for premium gasoline in Phnom Penh was as high as 5,700 riel per liter, or about $1.90, on March 3, though prices vary from station to station.

Oung Nget, general manager of a small depot called LHR, on National Road 4 between Phnom Penh and Kampong Speu province, said he was able to offer a lower price, about 5,000 riel per liter, because he runs a small, private company. Larger companies say they sometimes have to lower their own prices to compete.

But drivers on this road say they worry about the gas they are getting.

“The price of petroleum is a lot cheaper here than in Phnom Penh, because the owners use something to mix the petroleum,” said Srey Sophal, a motorcycle taxi driver on National Road 4, outside the city. “But I don’t know the technique.”

Nearby driver Pha Yav said his motorcycle sometimes runs poorly when fueled with lower-priced gasoline.

Pheng Soklin, general manager of a Savimex station, also on National Road 4, said drivers have a right to their opinions, “but we make sure to offer them at least 98 percent of the petroleum when they come to our depot.” Some fuel evaporates when it is being pumped, which accounts sometimes for a difference, he said.

Other stations, in an effort to compete, seek to undercut nearby stations, lowering their prices to lure in customers.

“Our depot has been open for just a few weeks, so we sell petroleum cheaply, because we want customers to know us,” said a staff member working at a nearby Tela station, who asked not to be identified.

On National Road 2, meanwhile, prices are much cheaper. Drivers say this is because it is imported from Vietnam.

“I don’t really know is it legal or not, but I also wonder why depot petroleum stations can sell petroleum at this cheap price,” said a motorcycle taxi driver.

Meanwhile, other stations are offering incentives like free bottled water and snacks to bring in more business. But this cost can sometimes be transferred into the price of the fuel, said Chhum Sophea, the owner of a Tela station on National Road 1. “We don’t offer anything, so we can sell at a lower price.”

The price fluctuations are due to a market that gets fuel from different places, said Son Chhay, a lawmaker for the opposition Sam Rainsy Party.

“It depends where the petroleum is imported from,” he said. “More than 35 percent of imported petroleum is illegally imported. Some petroleum stations in Phnom Penh import petroleum from Thailand. And, because they have a good cooperation with authorities there, they can smuggle petroleum in without paying tax. So they can sell at a cheaper price.”

Researcher Kim Ley, who keeps an eye on fuel prices, said high taxes on fuel mean more incentives for smuggling. And because the government does not disclose information on petroleum imports and prices to the public, some companies take advantage.

“The price is far more expensive than in other countries around us,” Kim Ley said. “So that leads to petroleum smuggling. And even though the government says it’s a free market, there is no structure to monitor the petroleum prices.”

Officially, import tariffs are about 35 percent for gasoline and 22 percent for diesel, according to the international petroleum company Caltex. According to Ministry of Finance data, around 1.65 million tons were imported in 2012—and increase of about 19 percent.

Officials for the Ministry of Finance could not be reached for further comment.

But the large amount of smuggling means that Cambodia loses a lot of revenue, Son Chhay said.

Kong Chandararoth, an economist and head of the Cambodian Institute of Development Study, said lower prices are good news for people in the countryside, but the system as a whole should reflect more balanced pricing.