Government to push ahead with fuel price hike

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)