Government delays fuel price hike

Government delays fuel price hike

JAKARTA (JP): The government abruptly delayed on Thursday the
planned fuel price hike a day before it was due to come into
effect, saying it had to weigh further the political, social and
security implications which might arise.

The decision was announced by Minister of Energy and Mineral
Resources Purnomo Yusgiantoro, after an economic meeting chaired
by Vice President Megawati Soekarnoputri at Merdeka Selatan
Palace.

No indication was given about how long the fuel price hike
would be delayed.

"We have not discussed a specific date because there are
various phases which need to be passed," Purnomo said.

Purnomo said Coordinating Minister for Political, Social and
Security Affairs Agum Gumelar would chair an inter-ministerial
meeting on Friday to discuss in-depth the impact of the fuel
price hike.

Recently dismissed minister of finance Prijadi Praptosuhardjo
last week received approval from the House of Representatives to
raise fuel prices by an average of 30 percent.

Electricity rates will also rise by an average of 17.47
percent early next month.

In a bid to maintain the 2001 state budget deficit at a safe
level of about 3.8 percent of gross domestic product, the
government had proposed to the House a cut in the fuel subsidy
from Rp 66 trillion to Rp 60 trillion, by means of the 30 percent
hike.

Ironically, the government's decision to raise fuel prices at
the time also followed an economic meeting chaired by Megawati.

There were fears that the fuel price hike would have
galvanized public discontent at a time when massive, and
sometimes violent, labor demonstrations were already affecting
major cities across the country.

The combination of these two major sources of unrest would
have rocked further President Abdurrahman Wahid's fragile
administration.

Separately, Finance Minister Rizal Ramli suggested that the
delay was not indicative of a cancellation of the planned price
hike, and that it would still go ahead in the near future.

Rizal contended that ministers in charge of the country's
social and security situation needed to make the final assessment
before the fuel price increase policy was implemented.

"This is normal standard operating procedure for every fuel
price increase," Rizal claimed.

However, he did not explain why such an assessment had not
been planned earlier.

Meanwhile, the head of the House's state budget task force
Benny Pasaribu said the House would be disappointed if the plan
were delayed, as it showed that the government had not been
properly prepared when it had initially proposed the policy.

Legislator Alvin Lie of the National Mandate Party, and a
member of the task force, suggested that this was an "attempt to
discredit Megawati."

But Rizal said that the decision to make a final assessment
came from Megawati herself.

Queue

Police were already on alert on Thursday in preparation for
possible unrest, as they guarded gas stations and other vital
fuel installations.

Jakarta Police chief Insp. Gen. Sofyan Yacob said he had
stationed his men at 17 riot-prone areas of the capital, such as
Glodok and Pasar Baru.

Jakarta Governor Sutiyoso disclosed that 5,020 police
personnel and 18,000 military soldiers had also been deployed to
safeguard the city.

The situation however was relatively clam.

Long lines of motorists were seen queuing at several gas
stations before news spread that the fuel price hike had been
delayed.

Until Thursday afternoon, gas stations at Mampang, Jl Sudirman
and Pejompongan in South Jakarta were packed with vehicles, the
drivers of which were hoping to fill their gas tanks.

A private individual named Aris said that he had driven to
several gas stations, only to find long queues of cars
everywhere.

"I've been to Grogol (West Jakarta) and Pluit (North Jakarta)
but both were completely packed. Then I came here to Pejompongan,
but it's also full," he told The Jakarta Post.

Meanwhile, at kerosene kiosks, such as the ones in
Pejompongan, and nearby Kemanggisan and Palmerah Barat, no queues
were seen and supplies flowed as usual.

In Semarang and Purwokerto, Central Java, Surabaya, Denpasar,
Medan, Balikpapan in East Kalimantan, and Palu in Central
Sulawesi, people also rushed to gas stations.

"We are a major oil producer, but we can't enjoy the benefit
of cheap fuel," Daryono, a bus driver, complained in Semarang.

Minor rallies to protest the fuel hike were observed in
Semarang, Medan, and Jambi. (45/har/hdn/rei/prb)