The government announced a set of price caps on retail petroleum products yesterday based on the application of its new fuel-pricing mechanism.

The maximum retail price of gasoline was set at 3,050 riel per litre, with premium capped at 3,150 riel per litre and diesel at 2,700 riel per litre, according to a press release from the Ministry of Commerce.

The government proposed the fuel-pricing mechanism in January after months of negotiations between state officials and oil companies aimed at establishing a fuel-pricing scheme responsive to changes in global oil prices.

The formula is calculated on the average Means of Platts Singapore (MOPS) benchmark, adding in taxes, VAT and local operating costs.

The mechanism requires Total, Caltex, PTT, Sokimex and Tela to keep their operating costs at or below $0.23 per litre. Meanwhile, Savimex and BVM are required to maintain operating costs at or below $0.18 per litre, while LHR’s limit is $0.15.

According to a prakas issued on March 9, the Commerce Ministry will re-calculate the price caps every 10 days, namely on the 1st, 11th and 21st of the month.

The government will also meet petroleum companies every six months to reconsider the formula’s costs and structure.

Retailers found selling gasoline at prices above the cap will be fined $1,000, according to the prakas.

The new price cap effectively drops the price of gasoline, which was retailing for about 3,250 riel per litre at most outlets in Phnom Penh last week.