Petroleum smuggling, the high price of fuel on the international market and high gasoline taxes are adversely affecting the profit margins of multinational petroleum companies operating in Cambodia, industry experts are saying.
Sok Kong, president of the Sokimex petroleum company, said high gasoline prices only exacerbate the illegal activity.
“The more that market demand and prices go up, the more smuggling,” he said. “I have closed one gas storage center in Neak Leung town two months ago because of bad sales. We cannot compete with the smugglers.”
Sokimex sold 3,000 tons of gasoline in 2001, compared to just 600 tons so far this year, Sok Kong said.
“I can’t afford to pay my workers,” he said.
Sok Kong said the government should take measures to stabilize the market because of the rise in international gasoline prices.
“In Vietnam and Thailand, the governments reduced the tax paid by investors and asked the gas companies to keep a stable price,” he said. “When the world price drops, then the government can increase taxes [again].”
Under the current situation, petroleum companies cannot reduce their prices at gas stations because the prices they pay on the international market are too high, he said.
Small-scale smuggling of gasoline is done by local dealers who bring the gas in from Vietnam by boats, motorcycles, cars and trucks, while larger operations involve tanker trucks bringing the illicit fuel across the Thai border.
A top official from the Total petroleum company shares these concerns and said petroleum companies intend to collaborate on a letter to be sent to Prime Minister Hun Sen and the Petroleum Authority of Cambodia asking the government to take action.
The official also noted that the quality of the smuggled petroleum is poor because it is often diluted.
An official from the British- owned Shell Cambodia Ltd said that if the government reduced fuel taxes—currently about 23 percent of the sale price—the price at the pump would go down.
This, he said, would increase sales and make smuggling less profitable. If more people fueled up at a gas station, the government would be able to recoup the tax money they lose by reducing the percentage of the tax, he said.
Lay Rithy, deputy director of the customs and excise department of the Ministry of Finance, said authorities confiscate at least five tons of illegal gas every day.
He said that before Hun Sen ordered customs officers to crack down on smuggling last year, the government collected between
25 billion and 28 billion riel ($6.4 to $7.2 million) monthly from smugglers.
Since the crackdown, the government has collected from
31 billion to 35 billion riel ($7.9 to $8.9 million) each month in taxes.
Hin Sopheap, public affairs officer at the British Embassy, however, is not so optimistic. He said no multinational companies from Britain have thought about investing here in the last two years because of Cambodia’s smuggling problem.
“I have seen very little activity on the part of the government to fight the smugglers, because the smugglers are untouchable,” Hin Sopheap said.