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)