Fuel price hike threatens jobs in Lampung
Oyos Saroso H.N., The Jakarta Post, Bandarlampung
The steep increase of diesel fuel prices has threatened thousands of jobs in Lampung province as several private companies have begun to prepare for massive layoffs of workers.
The companies will have to lay off the laborers in the near future as the cost of production has been on the rise since the diesel fuel price went up again in early August from Rp 2,200 (22 U.S. cents) per liter to Rp 5,480 per liter. The price increase policy is only for the industrial sector, or companies that more than 500 kiloliters of diesel fuel a month.
One of the companies set to lay off the workers was CV Bumi Waras, a holding company that runs a palm oil manufacturing and trading firm. The company's spokesman has stated publicly that they will lay off some 8,000 workers due to soaring production costs this month. Similar mass layoffs are being pondered by other companies in the province.
In response to the layoffs, a senior government official confirmed that some companies had already filed complaints with the government over the steep increases of the diesel fuel price. The companies also urged the Lampung government to step up pressure on state oil and gas company PT Pertamina in order to rethink the price hike.
"The companies have demanded that PT Pertamina give them a subsidy so that the price of diesel fuel remains at Rp 2,200 per liter," said deputy chief of Lampung Manpower Office, Haryo Setmiko.
Marketing Manager of CV Bumi Waras, Abeng, said that the price increase had hit the industry hard. "We employ tens of thousands of workers and we are afraid that we have to cut jobs due to the rising production costs," reiterated Abeng.
Meanwhile, the burden from the price increase was also felt by the state train operator PT Kereta Api Indonesia in Lampung. The spokesman of the company's Lampung branch, Ismanto, said that the overall costs had been on the rise since the price of diesel fuel was increased in early August. The train operator uses 1,900 kiloliters of diesel a month, on average. Previously, the company spent Rp 4.18 billion (US$418,000) a month for diesel, but since the price increase, the company's fuel expenditures would be expected to balloon to a whopping Rp 10.4 billion a month.
"Despite the increase, however, we have yet to raise the train ticket prices as the decision-making authority to raise the prices rests with our head office in Jakarta," said Ismanto.
Currently, there are at least 12 companies in Lampung, which have been adversely affected by the price increase policy.