Govt presses ahead with fuel price hike<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Despite potential objections from the House of Representatives,
\nthe government will press ahead with its plan to increase
\ndomestic fuel prices, saying it is only trying to fulfill the
\nfuel subsidy allocation as required by the 2005 state budget.<\/p>\n
"We respect the House, but the government must implement the
\nbudget, which the House passed into law, and which limits the
\nsubsidy to Rp 19 trillion," Vice President Jusuf Kalla told
\nreporters on Thursday. "We have yet to meet this target."<\/p>\n
The figure was stated in the 2005 state budget, and approved
\nlate last year by the House with an assumption that oil prices
\nwould average US$24 per barrel.<\/p>\n
Kalla explained that without the hike expenditure for fuel
\nsubsidies would reach Rp 100 trillion -- taking into account the
\npresent oil price of more than $45 a barrel -- which is far more
\nthan the amount allocated in the budget.<\/p>\n
Against this backdrop, the government has no alternative but
\nto hike fuel prices in the near future, Kalla said, though he
\nrefused to say when the hike would actually be implemented.<\/p>\n
Kalla asserted that both he and the President were not worried
\nthat such an unpopular decision would tarnish their image. "Our
\nimage would be worse if we could not deliver good education and
\nhealth services because of lack of funds," he replied
\ndiplomatically.<\/p>\n
Under the so-called compensation program, the government would
\nallocate some Rp 10 trillion in welfare expenditure -- mostly on
\neducation and healthcare -- in addition to the Rp 7.8 trillion
\nalready set aside under the 2005 state budget.<\/p>\n
Still, the government's plans will likely meet opposition from
\nsome legislators, who have voiced fears over the impact of the
\nprice rise on the poor. Top government officials and the House's
\nbudget committee were still discussing the issue at 9.30 p.m. on
\nThursday.<\/p>\n
Among the main stumbling blocks in the lawmakers approving the
\nplan is a request by the Commission for an audit of Pertamina's
\nfuel production costs in order to calculate more accurately
\nsubsidy allocations for fuel prices.<\/p>\n
Based on a rough calculations by the Ministry of Finance, with
\nfuel costing about Rp 2,870 per liter, assuming an oil price of
\n$35 per barrel, and with a current market price of Rp 1,810 per
\nliter, this means that the government is paying a subsidy of Rp
\n1,000 per liter.<\/p>\n
Roes Aryawidjaja, deputy to State Minister of State
\nEnterprises for telecommunication, energy and strategic
\nindustries, warned that it would not be easy to accurately
\ncalculate Pertamina's production costs, as the state-owned firm
\nis not only obliged produce and distribute fuel for commercial
\npurposes, but also for public service obligations (PSO) also.<\/p>\n
Roes added that a clear separation between production costs
\nfor PSO and for profit will only be applied sometime this year,
\nmeaning that the government will only be able to calculate real
\nproduction costs for fuel sometime next year.<\/p>\n
Elsewhere, Minister of Trade Mari Pangestu said her ministry
\nhas taken necessary measures to ensure the distribution of basic
\nfood items and to prevent price hikes due to higher fuel costs.<\/p>\n
"We have met with related trade associations, and they have
\ngiven a guarantee to provide sufficient stocks of their goods
\nboth before and after the fuel price increase," she said.<\/p>\n
In Surabaya, former president Megawati Soekarnoputri expressed
\nher disappointment over the government's plan, saying it was
\nunnecessary and not in line with Susilo's promises during the
\npresidential election campaign.<\/p>\n
Although she could understand the government's rationale for
\nthe hike, Megawati said that it should not come at the expense of
\nthe people.<\/p>\n
Meanwhile, observations by The Post have revealed that a
\nshortage of kerosene -- mainly used by low-income people -- has
\nspread throughout the city.<\/p>\n
Several kerosene agents had run out of stock two days ago, and
\nsaid that supply tanks, which usually come once a week, have not
\nbeen arriving on time.<\/p>",
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