Gov’t Subsidises US$0.02 to Help Cut Petroleum Prices

Cambodian Prime Minister Samdech Akka Moha Sena Padei Techo Hun Sen announced here this morning about the Royal Government of Cambodia (RGC)'s fuel subsidy policy.

Addressing to the graduation ceremony of 3,233 students of the Royal University of Phnom Penh at Koh Pich Convention and Exhibition Centre, Samdech Techo Hun Sen said all kinds of petroleum on the Cambodian market will reduce by 160 Riel (US$0.04) a litre from July 1, 2018 onward.

According to the Premier, the RGC will subsidise US$0.02 and the private sector (petroleum importers) another US$0.02 to reduce the petroleum prices.

Before, I planned to announce this subsidy policy on June 28, but I take this opportunity to announce it today. In the past five months, the RGC spent some US$83 million as fuel subsidy. We have to reduce VAT on gasoline, through which the RGC lost some more US$30 million a year. Besides, the private sector also took part in reducing US$0.02 per litre as well, therefore from July 1, 2018, the petroleum prices will drop by US$0.04 per litre, he underlined.

Currently, gasoline is sold at 4,150 Riel or US$1.02 per litre and diesel at 3,950 Riel or US$0.98 per litre, while the price of super is much higher and varies from one petroleum distributor to another.

To manage the gasoline price, the RGC has set a formula to calculate the retail prices given changes on international market.

According to the joint Prakas signed in 2016 by the ministers of commerce, economy and finance, and energy and mines, the retail prices of gasoline are calculated as follows: Unit price/Litre = Mean of Platts Singapore (MOPS) +Tax+ PREMIUM + VAT OUT.

MOPS price depends on the information received from Singapore by the Ministry of Commerce while the current PREMIUM (general expense + tax on profit + net income) is US$0.23 per litre for regular and premium gasoline and US$0.27 for diesel. The PREMIUM price will change every six months after the meeting between experts and the companies.

All the gasoline stations in the country have to follow this formula. If there is any violation, the station will be fined up to 4 million Riel (US$1,000), and its business will be suspended temporarily if it repeats.

Cambodia has eight major petroleum distributors including SOKIMEX, TELA, PTT (Cambodia), CALTEX, Bright Victory Mekong Petroleum, TOTAL, SAVIMEX, and LHR.

Source: Agency Kampuchea Press