Fuel price hike effective today<\/p>\n
JAKARTA (JP): The government finally raised fuel prices by a
\nhefty 30 percent late on Friday, just one day after it had
\ndecided to delay the plan due to concerns over its social and
\nsecurity implications.<\/p>\n
Newly appointed Coordinating Minister for the Economy
\nBurhanuddin Abdullah said the new fuel prices would take affect
\nas of Saturday.<\/p>\n
\"The fuel price hike is a difficult decision, but it is needed
\nto reduce the ballooning deficit in the state budget,\" he said,
\nduring the announcement of the new fuel prices.<\/p>\n
Under the new increase, the price of premium leaded gasoline
\nis raised by 26 percent to Rp 1,450 (about 12.8 U.S cents) per
\nliter from 1,150; automotive diesel oil by 50 percent to Rp 900
\nper liter from Rp 600; and kerosene by 14.28 percent to Rp 400
\nfrom Rp 350 per liter.<\/p>\n
Burhanuddin said that the fuel price increase would help
\nreduce fuel subsidy expenditure by Rp 6.2 trillion (about US$550
\nmillion) from an estimated Rp 60 trillion, to Rp 53.8 trillion.<\/p>\n
The increase will not affect the price of industrial diesel
\nfuel and bunker fuel, which have been set at 50 percent of
\ninternational market prices.<\/p>\n
Since April, the government has sold diesel fuel to industrial
\nusers at 50 percent of market prices, and at 100 percent of
\nmarket rates for foreign mining, oil and gas, and shipping
\ncompanies.<\/p>\n
Head of the National Development Planning Agency (Bappenas),
\nDjunaedi Hadisumarto gave an assurance that fares for city buses,
\ntrains fares for Jakarta and its environs, and ferries would not
\nbe increased, despite the fuel price hike.<\/p>\n
As compensation, he said, the government would set aside Rp
\n216.4 billion to operators of such transportation to help them
\ncope with the higher prices.<\/p>\n
The last time the government raised fuel prices was in October
\nlast year, with an average increase of 12 percent for all users.<\/p>\n
The latest announcement came just a day after the government
\nunexpectedly decided to delay the plan.<\/p>\n
The government initially set the fuel price hike for Friday,
\nbut it was postponed, following mass demonstrations by laborers
\nin major cities across the country, with some turning violent.<\/p>\n
When former president Soeharto raised fuel prices in 1998, it
\nled to a series of riots that resulted in his downfall.<\/p>\n
The current plan was approved by the House of Representatives
\njust one week before its implementation.<\/p>\n
The raising of fuel prices is a vital component of the
\ngovernment's proposed revisions to the state budget that have
\nbeen demanded by Indonesia's main donor, the International
\nMonetary Fund, to limit the widening budget deficit to a safe
\nlevel.<\/p>\n
As news spread of the fuel price hike, motorists in Jakarta
\nbegan lining up at about 10 p.m. to beat the midnight deadline.<\/p>\n
However, due probably to the late hour of the announcement and
\nthe fact that rain drenched many parts of the capital, the run
\nwas not apparent in all parts of the city.<\/p>\n
Two popular gas stations located on Jl. Jend. Sudirman, South
\nJakarta, were packed, as a queue of about 40 cars spilled out
\ninto the road.<\/p>\n
Police were observed guarding several gas stations in the
\nPejompongan area of Central Jakarta, and at Pondok Indah in South
\nJakarta.<\/p>\n
Despite the late hour, congestion was clearly evident near
\nPondok Indah Mall as motorists queued at a nearby gas station.<\/p>\n
However, some gas stations in Ciputat, South Jakarta that
\nnormally open till late were closed.<\/p>\n
Meanwhile, to allay fears of fuel scarcity because of a run on
\nfuel, state oil and gas company Pertamina guaranteed that
\nsupplies were safe.<\/p>\n
Pertamina president Baihaki Hakim said a run would have little
\nimpact on the nation's fuel supplies.<\/p>\n
He said that national fuel stocks were full, sufficient for 22
\ndays, and that refineries and fuel distribution channels were
\noperating normally.<\/p>\n
Djunaedi further said that the government would allocate Rp
\n2.2 trillion for various programs aimed at alleviating the impact
\nthe fuel price hike would have on the poor.<\/p>\n
\"Under the program to mitigate the impact of the cut in the
\nenergy subsidy, the purpose is to maintain the purchasing power
\nof the lower income bracket or the poor,\" he said.<\/p>\n
Under this program, he said, the government would allocate Rp
\n279.9 billion to provide rice at cheaper prices for 1.2 million
\npoor families.<\/p>\n
The government would further spend Rp 534.1 billion in
\nvaccination programs for children, and other medical needs of the
\npoor.<\/p>\n
Some Rp 833.5 billion would be allocated to provide, among
\nother things, scholarships and to pay for school renovation.<\/p>\n
Around 314 poor settlements would receive clean water, for
\nwhich the government would set aside Rp 174 billion.<\/p>\n
It also planned to provide 1,000 small enterprises with cheap
\nloans worth in total Rp 53 billion.<\/p>\n
The government hoped to spend another Rp 105.8 billion on the
\nempowerment of fishing communities.<\/p>\n
Djunaedi, however, added these programs had yet to receive the
\nHouse's approval, as the proposed budget revisions were still
\nunder debate. (bkm)<\/p>",
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