Govt planning to remove all fuel subsidies<\/p>\n
Adianto P. Simamora, The Jakarta Post, Jakarta<\/p>\n
The government said on Wednesday that due to continuing
\nbudgetary constraints it planned to entirely remove fuel
\nsubsidies and to raise power prices by an average of 6 percent
\nevery quarter starting next year.<\/p>\n
The plan would raise the maximum prices of fuel sold at gas
\nstations from the current 75 percent to 100 percent of
\ninternational market prices.<\/p>\n
\"We'll reduce fuel subsidy spending next year to Rp 15.87
\ntrillion (about US$1.74 billion), or down 52 percent from this
\nyear's spending of Rp 30.5 trillion,\" Minister of Energy and
\nMineral Resources Purnomo Yusgiantoro told the House of
\nRepresentatives' Commission VIII on energy affairs during a
\nhearing.<\/p>\n
Exempted from the new pricing policy is kerosene for household
\nuse -- currently sold at Rp 600 a liter and which the government
\nplans to subsidize until 2004.<\/p>\n
The new pricing scheme requires the House's approval.<\/p>\n
Fuel pricing policy is seen as a politically sensitive issue
\nas consumers here have long been accustomed to generous
\nsubsidies.<\/p>\n
But since the 1997 economic crisis, the government's priority
\nhas shifted to paying off its debts, forcing it to gradually
\neliminate fuel subsidy spending from the state budget.<\/p>\n
To avoid recurrent violent protests every time it plans to
\nhike fuel prices, the government has pegged them to world market
\nprices since January of this year.<\/p>\n
State-owned oil and gas company Pertamina, which purchases and
\ndistributes fuel, announces monthly price adjustments based on
\nthe Mid Oil Platt Singapore (MOPS) average price movement.<\/p>\n
Purnomo added that subsidies on electricity would also be
\nreduced with an average 6 percent increase in power charges every
\nquarter starting next year.<\/p>\n
The planned increases in fuel and power prices drew immediate
\ncriticism from the Indonesian Consumers' Foundation (YLKI).<\/p>\n
\"The government seems to forget that our local purchasing
\npower is far lower than that in other countries,\" YLKI executive
\nMuhammad Iksan said while urging the government to delay the
\nplan.<\/p>\n
Lili Asdjudirejo, executive director of the Indonesian Textile
\nAssociation (API) agreed, adding that the rise in energy costs
\nwould undermine the ability of local producers to compete with
\nimported textile products.<\/p>\n
\"We hope our government will make the right decision and
\nconsider the fate of local industry,\" he said, explaining that
\nlocal producers were already burdened by various unnecessary and
\noften illegal charges.<\/p>\n
The labor intensive textile industry is among the worst hit by
\nthe economic crisis and a gloomy global export market has now
\nfurther eroded the chances of a recovery.<\/p>\n
Djimanto, the secretary-general of the Indonesian Footwear
\nAssociation (Aprisindo), suggested that the government consider
\nthe woes of domestic industry and postpone the fuel price hikes.<\/p>\n
\"We agree to the plans for subsidy cuts. However, next year
\nisn't the right time as many local firms are still suffering
\nheavy losses,\" he argued.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-planning-to-remove-all-fuel-subsidies-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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