Govt may bow to pressure over utility price hikes

Govt may bow to pressure over utility price hikes

Fabiola Desy Unidjaja, The Jakarta Post, Jakarta

Cracking under pressure, the government dropped a hint of bowing
more to people's incessant protests against hikes in utility
prices on Friday.

After agreeing to delay the telephone rate increase, President
Megawati Soekarnoputri is likely to announce similar changes to
her government's policy on fuel and electricity charges in the
coming weeks.

"I cannot reveal the government's decision. However, regarding
the fuel price and electricity rate the government will
accommodate the public's demand," State Minister for
Communication and Information Syamsul Mu'arif told a media
conference after a limited Cabinet meeting at the State Palace.

Megawati called the Cabinet meeting to recalculate the hike in
prices her government had announced over two weeks ago.

"The new decision (on fuel prices and electricity rates) will
be further discussed with the House of Representatives as it will
affect the 2003 State Budget," Syamsul said.

Megawati's administration is facing the biggest challenge ever
in its 18-month-old existence as people across the country have
taken to the streets over the past two weeks to oppose the
multiple increase in prices.

Government opposition comprises various groups, including
politicians, students, workers and businesspeople, who represent
people from almost all walks of life.

Political weight has been involved in the antigovernment
protests, with some opposition leaders calling for an
establishment of a presidium to replace the current government
whom they claim had lost public confidence.

The fare hikes were announced on Jan. 1, with the raise up to
22 percent for the fuel price, 6 percent for electricity and 16
percent for telephone charges.

The government said the increase was part of the country's
grand design to cut down subsidy expenses through the utilities
and provide a direct compensation fund to help the poor.

In the consultation meeting with the House on Thursday, the
government decided to delay the hike in telephone charges, but it
was far from satisfying to the public, who demanded a similar
decision on fuel and electricity.

The House set a one-week deadline for the government to
recalculate the prices and expected to hold a follow-up meeting
to discuss the reassessment as soon as possible.

Megawati has held a series of meeting to ease the country's
tension, and ordered her ministers to recalculate the hikes.

The decision to delay the telephone rate hike slightly reduced
the number of rallies in Jakarta. But in Surabaya, a clash broke
out between police and student protesters, leaving four
demonstrators wounded.

A source earlier said that state-owned oil and gas company of
Pertamina had calculated that the government would be able to
reduce around 15 percent of the fuel price hike.

Syamsul, after Friday's meeting, refused to go into detail
regarding the amount of the possible reduction saying that next
Wednesday there would be a meeting between the government and
House to settle the issue.

"We emphasize that the policy to reduce the subsidy and the
decision to provide compensation for the poor will remain, but we
will seek other possible measures to accommodate the public's
demand," he added.

The minister said the adjustment will be made through a budget
revision, which usually is proposed by the government after six
months of the ongoing fiscal year.

"Basically, we will not change the 2003 budget, but there will
be adjustment in the additional budget," Syamsul said.