Govt raises fuel prices by average of 22%
The Jakarta Post, Jakarta
The government officially raised fuel prices by an average of some 22 percent late on Wednesday and launched a new pricing formula by pegging most fuel to world market prices.
The government said that the hike and the new formula were necessary in a bid to ease the burden on the state budget and to curb smuggling of fuel out of the country.
The price of kerosene for households and small enterprises was raised to Rp 600 (5.77 U.S. cents) per liter from Rp 400, and for industry it was up to Rp 1,230.
The price of premium gasoline went up to Rp 1,550 per liter from Rp 1,450.
The price of automotive diesel at gas stations, for public transportation sector, and industry was raised to Rp 1,150 from Rp 900, but for the mining and oil and gas sectors it was increased to Rp 1,510.
The price of industrial diesel was set at Rp 1,110, but for the mining and oil and gas sectors it was set at Rp 1,480.
The price of fuel oil was raised Rp 925, and for the mining and oil and gas sectors it was set at Rp 1,230.
Since April 2001, the government has set the price of industrial diesel and fuel oil at 50 percent of world market prices.
The government said in a press conference that the new prices, except for household kerosene, would only apply until the end of February.
It said that the state-owned oil and gas company Pertamina would announce a new price list at the beginning of each month starting in March. It can be either lower or higher than the prices set today as they will be according to market prices.
It added that the upcoming new price lists would based on the market price or the Mid Oil Platt Singapore (MOPS) price.
The government said that the price of premium gasoline had been set equal to the MOPS price, the prices of automotive diesel, industrial diesel, fuel oil and kerosene for industry at 75 percent of the MOPS prices.
The announcement of the fuel price hike was made by Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti, Coordinating Minister for Social Affairs Yusuf Kalla, Finance Minister Boediono and Minister of Energy and Industry Purnomo Yusgiantoro.
The government said that the new pricing formula was needed to help ensure that the government fuel subsidy helped the right people, and to help curb rampant smuggling of fuel out of the country.
The government has set a maximum and minimum price for the fuel to avoid against extreme fluctuations in world prices.
The minimum for premium gasoline is Rp 1,450 and the ceiling is Rp 1,750; for automotive diesel it is Rp 900 and Rp 1,550; for industrial diesel it is set at Rp 900 and Rp 1,520; fuel oil will be Rp 800 and Rp 1,150; and kerosene for industry the minimum is Rp 900 and the ceiling price is Rp 1,650.
The fuel subsidy in the 2002 state budget is set at Rp 30.5 trillion, down from Rp 53.77 trillion last year.
The government will also allocate around Rp 2.85 trillion in compensation funds to help mitigate the impact of the fuel price hike on the poor.
Raising fuel prices has been a politically sensitive issue in the country in recent years as it could trigger a rise in transportation costs and the price of other basic commodities, thus creating huge burdens particularly for low income people already suffering from three years of economic hardship.
Shortly after 10 p.m. radio stations began broadcasting the news to the public and many gas stations soon became flooded with cars looking to fill their tanks at the lower prices.
The Police and military are on "first alert status" to keep the peace.