Govt to go ahead with fuel price hike next month
Govt to go ahead with fuel price hike next month
JAKARTA (JP): The government said on Thursday it would go
ahead with a plan to raise fuel prices in October, but was still
unsure of the exact date of the increase.
"It's unlikely that we can either cancel, alter or delay the
fuel price increase," Cabinet Secretary Marsillam Simanjuntak
said at the presidential office.
He said the decision to go ahead with the fuel price hike came
following a Cabinet meeting led by Vice President Megawati
Soekarnoputri.
However, Simanjuntak said the government had yet to decide on
the exact date for the planned price increase.
"We'll look for the most appropriate time that will take into
consideration economic aspects, and, foremost, the social,
political and security aspects," he was quoted as saying by
Antara news agency.
Coordinating Minister for the Economy Rizal Ramli said his
economic team was only continuing the work of the previous team.
"What we are doing now is simply carrying out that plan,
having decided to go ahead," Rizal said.
The government plans to raise fuel prices by an average of 12
percent to cut subsidy spending to about Rp 18 trillion (US$2.1
billion).
The price for premium gasoline will increase to Rp 1,150 per
liter from Rp 1,000, automotive diesel fuel to Rp 600 per liter
from Rp 550, kerosene to Rp 350 from Rp 280 and bunker fuel to Rp
400 per liter from Rp 350.
Rizal said the government might allocate the subsidy savings
for infrastructure projects, as well as for the development of
small and medium-size enterprises.
"This will help create more jobs," he added.
According to Rizal, reducing the fuel subsidy also would
narrow the gap between local fuel prices and international
prices.
Rizal said the existing price margin between local and
international fuel prices had led to rampant fuel smuggling.
The government reported earlier it was loosing some Rp 1
trillion a year from the smuggling of fuel across sea routes
alone.
In addition, safeguarding fuel from smugglers also will help
secure the domestic fuel supply, Rizal said.
As part of an agreement with the International Monetary Fund,
the government will reduce subsidy spending in this year's state
budget.
Initially, the fuel price hike was scheduled for April, but
massive demonstrations against the plan led President Abdurrahman
Wahid to postpone it until October.
The government last raised fuel prices in 1998, which resulted
in riots that contributed to the downfall of then president
Soeharto in May of that year.
To help the poor cope with the rise in fuel prices, the
government has said it will provide them with cash aid.
According to the National Development Planning Board, some
17.4 million poor families are eligible to receive the funds.
According to the plan, each poor family will receive an annual
subsidy of Rp 50,000 to compensate for the increased fuel prices.
(bkm)