Rising oil prices at home and abroad prompted Prime Minister Hun Sen on Wednesday to ask for help from China, Japan, South Korea and fellow Asean countries in a prepared speech delivered at the Asean energy meeting in Siem Reap.
The government is also about to begin a publicity campaign aimed at encouraging Cambodians to save energy, Industry, Mines and Energy Ministry Secretary of State Ith Praing said during a phone interview Wednesday.
Hun Sen said that Cambodia will work within Asean to reduce dependency on oil, develop biofuels and hydropower, and explore the possibility of stockpiling oil to reduce demand during peak price periods.
Cambodia has one of the highest petroleum prices in Asia and is 100 percent dependent on imported petroleum.
“The region’s over-reliance on external sources of energy supply implies that we are facing the challenge of energy security,” Hun Sen said.
“We all in Asia must jointly develop and explore new sources and supplies of energy and embark on efficient use of energy. This has become the most critical factor for sustainable development in Asean and Asia.”
On Wednesday, crude oil traded at $61 a barrel, a 45-percent increase since the beginning of the year. Cambodia, which imports all its petroleum and imposes taxes on fuel, rather than providing subsidies, has been particularly hurt by the current spike, Ith Praing said.
Farmers in Battambang said earlier this week that they cannot afford to operate farm machinery because of the high cost of fuel.
Asean is scheduled today to issue a statement committing itself to tackling the problem of energy costs, Ith Praing said.
Following the meeting, the government will begin a public campaign to encourage energy conservation, he said.
“To save is the only strategy to lower the costs of energy,” Ith Praing said.
As a first step, ministries will be told to save on air-conditioning and lighting.
“Sometimes I see street lights on until 7 am. That is costing energy,” he said.
A senior official at the Finance Ministry said that in 2004, Cambodia spent $600 million to purchase petroleum and is projected to spend $800 million this year, with demand increasing 20 percent every year.
“This has affected the inflation rate and the prices of consumer goods,” he said, adding that the total spending on petroleum is projected to increase 15 percent every year.
The official urged people to use fuel-efficient generators, renewable energy and hydropower.
When it comes to alternative fuels, Cambodia is in luck, National Petroleum Authority mineral expert Men Den said Wednesday.
Recent preliminary studies show that billions of cubic meters of natural gas exist in Cambodian waters, and there are billions more in disputed waters, he said. He added that there are also millions of tons of coal. Prior to developing these fuels, Cambodia must link to the regional power grid to reduce the impact high petroleum prices have on diesel-generated electricity here, he said.
Independent economist Kang Chandararot welcomed Hun Sen’s speech.
“I think addressing oil prices is a great development for the Cambodian economy,” he said. “Our economy is suffering under the high oil prices. You have to think of increased energy supply like blood supply. Our economy cannot survive without lower costs of energy.”
Developing alternative fuels and investing in natural gas, which Southeast Asia is a net exporter of, are long-term solutions to Cambodia’s energy crisis, Kang Chandararot said.
“In the short-term, only lowering taxes can address it,” he said.
According to Kang Chandararot’s analysis of Ministry of Finance data, the government imposes a 107 percent tax on fuel.
On Tuesday, the Sam Rainsy Party called on the government to lower fuel taxes, citing studies indicating that lowering taxes would decrease smuggling, increase legal transport and boost revenue.
Creating an oil stockpile would benefit the economy at all levels if it can be afforded, Kang Chandararot said.
But “I don’t know about the cost or how much Cambodia could contribute to it,” he added.