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.