Government to push ahead with fuel price hike

JAKARTA (JP): President Abdurrahman Wahid said on Monday the government would push ahead with plans to increase electricity tariffs and fuel prices despite the public's protests, citing that it was part of the agreement with the International Monetary Fund (IMF).

The President, also known as Gus Dur, said Indonesia would not cancel the plan as the measure could hamper the country's efforts to obtain loans from the IMF.

"The President said the government could not lift subsidies on both commodities, because if this was done, it would face difficulties in obtaining funds from the IMF," Budiman Sudjatmiko, the chairman of the youth party Partai Rakyat Demokratik (PRD), told reporters after meeting with the President.

Budiman, party secretary general Petrus H. Harianto and head of the party's board of leaders Faisol Reza were invited by the President for a talk at the Bina Graha presidential office after they had staged a rally against fuel price and power tariff increases in front of the palace complex.

Budiman said he asked Gus Dur to review the plan to protect the interests of the public who elected him.

The President turned down the request. He promised, however, the government would try to gradually cut the country's dependency on the IMF and foreign loans.

Budiman said his party would push ahead with campaigns to block the government's efforts to raise the prices of both commodities, arguing that the measure was too burdensome on a public not yet fully recovered from the impact of the economic crisis.

"We shall try to block the plan through demonstrations and seminars," former political prisoner and demonstration leader Budiman said.

The government agreed on Friday with the House of Representatives's special team on fuel prices and power tariffs to increase the power tariff by an average of 29.43 percent starting on April 1.

They agreed, however, to protect low-income households that consume a maximum capacity of 900 watts at any one time from the increases.

The agreement was lower than the 35 percent tariff increase proposed by the government, and was different from the government's initial proposal to only protect consumers of a maximum capacity of 450 watts at any one time from the increase.

The government expects to cut subsidies for electricity by Rp 3.9 trillion (US$535 million) this year.

The government has also proposed a 20 percent increase in fuel prices, but it has yet to reach an agreement with the House's special team on the proposal.

Legislator Pramono Anung, who chaired the House's special team on fuel prices and power tariffs, said earlier the team had proposed a 10 percent increase for Premium and Premix gasoline but no price increase for kerosene and diesel oil.

Analysts say the planned increases in fuel prices and power tariffs may serve as a test to gauge the strength of Abdurrahman's four-month administration.

Subsidy reductions for both commodities has been a sensitive issue in the country for three decades.

The last price increases for both commodities, which took place in May 1998, sparked violent riots resulting in the downfall of president Soeharto. (jsk/prb)