Taking up what many believe is an impossible challenge from Prime Minister Hun Sen, a local NGO this week has claimed it can sell gasoline to the general public for about half the price that petroleum companies charge now.
The little-known Community Development for Agriculture, a Cambodian-run aid group, wrote a letter to Prime Minister Hun Sen on Monday telling him that it could sell gasoline for a maximum of 1,500 riel (about $0.38) per liter. Petrol currently sells for about 2,850 riel (about $0.70) per liter.
“We could sell petrol for only [$0.38] after paying all the taxes,” Phann Syna, president of CDA, said Tuesday.
CDA’s offer came after Hun Sen told reporters last week that any petroleum company that can sell gasoline for about $0.38 per liter would get a monopoly on government petroleum contracts.
“I welcome any company able to sell gasoline at 1,400 to 1,500 riel per liter,” Hun Sen said, adding “the government will provide a monopoly for any company that can do so.”
Phann Syna said his NGO had links to a Russian company that could provide cheap gas to the country, but declined to answer questions about how he could do it all legally given the fact that many in the industry say it is impossible.
How the NGO will be able to sell petroleum legally for no more than $0.38 per liter “is a company secret and very confidential,” Phann Syna said.
The global price of oil has hit record highs this week, averaging more than $40 per barrel. In Cambodia, gasoline prices are nearly double that of Vietnam and Thailand because the gasoline tax is about 100 percent of the import price.
These two factors alone render CDA’s reduced gasoline price proposal suspect at best, laughable at worst.
But then again, it is not clear who actually pays the gasoline tax. An Economic Institute of Cambodia report shows that while the number of vehicles has increased steadily in the past decade, the gasoline tax revenue collected by the government has gradually fallen since 1994.
“With poor governance, loose border control and widely acknowledged rampant corruption in the country, fuel smuggling for quick windfalls is simply too irresistible,” the report said.
Assuming CDA does not smuggle fuel and pays the correct amount of taxes, it is “totally impossible to make money” at $0.38 per liter, Bin May Mialia, an official with the petroleum company PTT, said Tuesday.
With oil selling at more than $40 per barrel, petrol would cost about $0.33 per liter if no taxes are paid, he said. Adding in the gasoline tax, that would push the price per liter to a minimum of about $0.65.
“If they don’t pay taxes, yes they can do it,” Bin May Mialia said.
Sorn Sokna, president of Sokimex, agreed. “I would say lower gas prices would be good news for all, but I’m afraid it won’t happen like that.”
But Phann Syna said his proposal is for real. He challenged the government to set up checkpoints wherever his company imports petroleum to confirm no smuggling is taking place.
“I don’t think the prime minister will reject our business plan if he has good will, as he said,” Phann Syna said.
“I have a good relationship and cooperate with the Russian company,” he said. “I have enough ability to supply gas for our market.”
Soy Sokha, the economic adviser for the Council of Ministers, however, said Tuesday he had not seen CDA’s proposal.
Asked about the plan, Soy Sokha said: “I really don’t know.”
