Prime Minister Hun Sen has an-nounced that he will allow private companies to import gasoline from Thailand, Laos and Vietnam in a bid to cut gasoline costs and combat illegal smuggling, government spokesman Khieu Kanharith said Sunday.
Hun Sen announced his decision during a meeting at the Council of Ministers on Friday following a failed attempt by the Finance Ministry to convince the five main gas companies operating in the country to lower their prices, Khieu Kanharith said by telephone.
“Samdech Hun Sen is allowing any company to import lower-priced gasoline to Cambodia,” Khieu Kanharith said. “We cannot wait for the companies [to lower their prices], or it will be too late.”
The five companies are Caltex Cambodia Ltd, Total Cambodge, Sokimex, Kampuchea Tela Co Ltd and PTT (Cambodia) Ltd, he added.
Cambodia’s gas prices are among the highest in the region. The SRP had threatened earlier this month to call for a mass protest in Phnom Penh in early February if the government continued to ignore questions at the National Assembly about the cost of gasoline or if there was no significant de-crease in prices.
SRP lawmaker Son Chhay said Sunday that his party welcomes Hun Sen’s announcement.
“We hope that, with this positive response, there will be no need for us to organize demonstrations,” he said.
The government will require a $250,000 deposit from new gas companies, Khieu Kanharith said.
Companies were previously required to transport gasoline from the Sihanoukville port to Phnom Penh before distributing it to the provinces, Khieu Kanharith said.
“Whenever there are many companies, the price of gasoline will be reduced,” he added.
But representatives of several of the main gasoline companies said they disagreed.
Sokimex President Sok Kong said gasoline prices would not be affected by an increase in retailers, and blamed the Finance Ministry for charging too much import tax.
“People have blamed us, but the import taxes are very high,” he said.
Sok Kong added that he was not concerned by a possible increase in competition.
“If other companies have the same taxes, the price will be similar,” he predicted. He declined to say how much tax Sokimex pays.
Total Cambodge Director John Wilson said that he was unaware of Hun Sen’s announcement, but that it would probably not cause too much of a change in the price of gasoline.
“What it will possibly do is affect the smuggling—if the same people [who smuggle gasoline now] pay import duty, that’s a good thing,” he said.
About 30 percent of the price of gasoline is paid to the government as tax, he added.
“The government here taxes gasoline heavily and [neighboring countries] don’t. In fact they subsidize it,” he said.
Tim Smyth, managing director of market-research firm Indochina Research, said that in theory more competition should lower the price of fuel, but that there may already be more than enough competition.
“It’s difficult to tell when you already have five operators in a relatively small market. I’m not sure what effect additional providers will have,” he said.
Finance Minister Keat Chhon could not be reached for comment.
Chea Peng Chheang, secretary of state for the Ministry of Finance, said he was unaware of the government’s policy on gasoline tax and referred all questions to the Customs and Excise Department Director Pen Siman, who could not be contacted.