No deadline set for delay in fuel price hike: Minister<\/p>\n
JAKARTA (JP): The government and the International Monetary
\nFund (IMF) have agreed to delay fuel price increases for an
\nindefinite period, Minister of Mines and Energy Susilo Bambang
\nYudhoyono said on Tuesday.<\/p>\n
\"What's important is how we prepare ourselves and the people
\nfor the implementation of a support mechanism to protect poor
\npeople from the increase in fuel prices,\" Bambang said following
\na meeting with economic ministers and representatives of the IMF.<\/p>\n
The government initially planned to raise fuel prices by an
\naverage of 12 percent on April 1, but mounting public opposition
\nforced President Abdurrahman Wahid to delay the plan.<\/p>\n
The last time the government raised fuel prices in 1998
\nprovoke massive rioting, helping toward the resignation of former
\npresident Soeharto.<\/p>\n
\"So while we wait for the cut in fuel subsidies, the
\ngovernment will continue to prepare itself,\" Bambang said.<\/p>\n
The government planned to protect the poor from the price
\nincrease by channeling cash aid of Rp 350 billion (US$43 million)
\ndirectly to them through post offices across the country.<\/p>\n
Director general of oil and gas at the Ministry of Mines and
\nEnergy Rachmat Sudibyo said last week the government was prepared
\nto hike fuel prices within three months as of April 1.<\/p>\n
The fuel price increases are included in the letter of intent
\nsigned by the IMF and the government to cut fuel subsidies in the
\nApril-December 2000 state budget.<\/p>\n
Rachmat said the IMF's letter referred only to an increase in
\nfuel prices within this year, without specifying a date.<\/p>\n
However, he added, the delay would cost the government about
\nRp 250 billion in additional fuel subsidies each month.<\/p>\n
Economists were of the opinion the public would accept the
\nincrease in fuel prices provided that the state-owned oil and gas
\ncompany Pertamina operate more efficiently.<\/p>\n
An audit of Pertamina by PriceWaterhosueCoopers for the period
\nfrom April 1996 to March 1999 revealed inefficient practices and
\nlosses of income opportunities at the state company amounted to
\nsome $4.69 billion.<\/p>\n
Pertamina has frequently blamed existing regulations for
\ncausing many of the inefficiencies and hampering its growth.<\/p>\n
By law, Pertamina is subject to taxes of 60 percent, far
\nhigher than any company.<\/p>\n
Pertamina president Baihaki Hakim said revising current oil
\nand gas regulations was the company's highest priority in
\nrestructuring the company.<\/p>\n
The IMF in its letter of intent also made the replacement of
\nthe current oil and gas law and the restructuring of Pertamina as
\nprerequisites in obtaining its financial aid.<\/p>\n
Bambang went on to say the government would officially propose
\na new oil bill to the House of Representatives in June.<\/p>\n
He said the forthcoming letter of intent would also require
\nPertamina to submit progress reports on its restructuring
\nprograms to the government every quarter.<\/p>\n
The previous government, with Kuntoro Mangkusubroto as
\nminister of mines and energy, proposed to the House an oil and
\ngas bill last year aimed at revoking Pertamina's oil and gas
\nmonopoly.<\/p>\n
But the House shot down the bill, insisting that the company
\nshould maintain its monopoly rights.(bkm\/rei)<\/p>",
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