Govt raises fuel, electricity prices<\/p>\n
JAKARTA (JP): The government increased yesterday fuel prices
\nby between 25 percent and 71.43 percent and electricity tariffs
\nby 20 percent to reduce subsidies and curb the state budget
\ndeficit.<\/p>\n
The new prices are effective as of today.<\/p>\n
Minister of Mines and Energy Kuntoro Mangkusubroto said
\nyesterday the government had no choice but to increase fuel and
\nelectricity prices.<\/p>\n
He said government revenues had been declining sharply during
\nthe economic slowdown while the costs of fuel and electricity had
\nrisen sharply due to the rupiah's steep depreciation.<\/p>\n
"President Soeharto is fully aware that this measure will
\nincrease the economic hardships for the public but he asked for
\nour full understanding and cooperation to make sacrifices in
\norder to emerge from the current economic difficulties," he said
\nafter meeting with the President.<\/p>\n
Kuntoro said the measures were still in line with social
\njustice principles as better-off consumers would subsidize those
\non low incomes.<\/p>\n
The price of kerosene, the fuel most widely used by low-income
\nfamilies, experienced the smallest increase of 25 percent to Rp
\n350 per liter. The price of gasoline increased by more than 71
\npercent to Rp 1,200.<\/p>\n
Likewise, those who use small amounts of electricity will be
\nsubsidized by major users.<\/p>\n
Jet fuel was raised to Rp 600 from Rp 420 per liter,
\nautomotive diesel oil to Rp 600 from Rp 380, industrial diesel
\noil to Rp 500 from Rp 360 and bunker oil to Rp 350 from Rp 240.<\/p>\n
Following the price hike announcement, thousands of motorists
\nlined up outside gas stations across the city to fill up their
\ntanks before the new prices became effective at midnight.<\/p>\n
Police were seen on guard at some stations to help ease
\ntraffic congestion which resulted in gridlock.<\/p>\n
The last time the government raised fuel prices was in January
\n1993 and electricity tariffs increased in March.<\/p>\n
The country is a net oil exporter but it subsidizes the
\ndomestic use of fuel since it still depends partly on imported
\nfuels due to the limited capacity of the refineries owned by the
\nstate-owned oil and gas company Pertamina.<\/p>\n
Kuntoro estimated national fuel consumption this year would
\nreach 52 million kiloliters, about 12 million kiloliters of which
\nare imported.<\/p>\n
Pertamina imports about 70 million barrels of heavy crude oil
\nannually for its refineries to produce fuel.<\/p>\n
"The sharp depreciation of the rupiah against the dollar since
\nmid-last year has raised the cost of crude oil and imported
\nfuels," he said.<\/p>\n
If the government did not increase the prices of both
\ncommodities, subsidies for them would reach Rp 27.5 trillion for
\nthe current fiscal year -- or about one fifth of the state
\nrevenues.<\/p>\n
The price rises will reduce subsidies to Rp 6 trillion for
\nfuel and to Rp 2.3 trillion for electricity in the current fiscal
\nyear, Kuntoro said.<\/p>\n
"This will allow the government to allocate bigger subsidies
\nfor more vital commodities such as rice, soybean and medicines
\nand to spend more on education," he said.<\/p>\n
The minister said kerosene would take up Rp 4 trillion of the
\nRp 6 trillion allocated for fuel subsidies during the current
\nfiscal year.<\/p>\n
The remaining 30 percent of the fuel subsidy was mostly
\nallocated for automotive diesel, he said.<\/p>\n
The government raised electricity price by 20 percent to an
\naverage Rp 233.59 from Rp 194.74 per kilowatt hour (kwh) and will
\nagain raise the tariff by another 20 percent in August and again
\nin November.<\/p>\n
Kuntoro said the government allowed low-income households to
\napply for a special rate similar to that applied to nonprofit
\norganizations to ease their burden.<\/p>\n
The government set a flat monthly tariff of Rp 9,800 for low-
\nincome users with a monthly maximum use of 220 volt-ampere or 200
\nwatts.<\/p>\n
"The falling rupiah rate has steeply raised costs of
\nelectricity because the State Electricity Company buys its gas,
\ngeothermal and power from independent (private) suppliers in
\ndollars," he said.<\/p>\n
Gradual reduction of subsidies for fuel, electricity and other
\nbasic staples is part of the reform package agreed with the
\nInternational Monetary Fund early last month. (jsk)<\/p>\n
Table: Prices of fuels (per liter in rupiah)<\/p>\n
(FUEL, NEW, OLD, % CHANGE):
\n(Kerosene, 350, 280, 25);
\n(Avtur, 600, 420, 42);
\n(Avgas, 600, 420, 42);
\n(Premium gasoline, 1,200, 700, 71);
\n(Automotive diesel, 600, 380, 57);
\n(Industrial diesel, 500, 350, 38);
\n(Residue fuel, 350, 240, 45).<\/p>",
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