Fuel coupon system axed for cash aid
Fuel coupon system axed for cash aid
JAKARTA (JP): The government, in abandoning the planned fuel
coupon system, has decided to distribute cash aid to the poor
instead.
A staff expert at the Ministry of Mines and Energy, Iin Arifin
Takhyan, said on Thursday evening that the government decided to
scrap the coupon system due to strong public opposition and lack
of preparation.
"The coupon system is considered unpractical, prone to abuse,
and is considered uneconomic given the high production cost of
the coupons," Iin said in a hastily-prepared media conference
after the meeting of the government's fuel and electricity
increase team -- presided over by Coordinating Minister of
Economy, Finance and Industry Kwik Kian Gie.
Iin cited the strong opposition of non-governmental
organizations and the association of gasoline station owners to
the coupon system.
Under the cash payment system, all members of the public,
including poor people, would buy fuel at newly-issued prices
starting on April 1.
The poor, however, would be provided with cash upfront in
order to purchase fuel at the new prices.
The government recently announced the coupon system to protect
public bus passengers and poor families from ever-increasing
hikes in fuel.
The government and the House have agreed to raise fuel prices
by an average of 12 percent in order to cut fuel subsidies for
the April-December 2000 fiscal year.
The government announced that it would increase the price for
Premium gasoline to Rp 1,150 (11 US cents) from Rp 1,000 per
liter, automotive diesel oil to Rp 600 from Rp 550 per liter,
kerosene to Rp 350 from Rp 280, and bunker oil to Rp 400 from Rp
350 per liter.
The plans to cut fuel subsidies was part of the agreement
between the Indonesian government and the International Monetary
Fund (IMF) which has provided bailout loans to the government to
help them recover from the economic crisis.
With the new price, the government would cut fuel subsidies to
Rp 22.4 trillion for the next fiscal year, from an estimated Rp
27.5 trillion in the 1990-2000 fiscal year ending March 31, 2000.
Under the cash system, Iin said, each needy family would
receive Rp 10,000 in cash assistance from the government to buy
kerosene at the new price throughout the April-December 2000
fiscal year, determining that a poor family would on average
consume 12 liters during this eight-month period.
He also stated that the government would refer the data
qualifying those eligible for the fuel cash aid to the
government's Social Safety Net Program Coordination Team.
According to them, there are 17.4 million poor families across
the country.
Iin said the government would also provide cash aid to
passengers of economy-class buses and that the Association of
Land Transportation Owners (Organda) and the Land Transportation
Control Agency (DLLAJR) would join them in this effort.
Legislator Irwan Prayitno, head of the House of
Representatives' Commission VIII for mines and energy, voiced
support for the government's decision.
"We disagree with the coupon idea because we are only one week
ahead of schedule for the increase in fuel prices. The system
itself isn't sound enough and the people are far from ready,"
Irwan said, adding that most of the Commission's members favored
the cash system to the coupon system.
He noted that under the cash system, the government would have
to allocate some Rp 320 billion (US$43 million) in aid to the
poor and to public bus passengers throughout the April-December
2000 fiscal year.
According to him, the operation of a coupon system could cost
the government Rp 417 billion.
Analysts said the plans to increase fuel prices could become a
test case for the administration of President Abdurrahman Wahid,
as the previous administrations were always reluctant to increase
fuel prices.
The government's last increase in May 1998 is what sparked the
mass rioting that led to the resignation of then president
Soeharto. (bkm/jsk)