'Govt to raise fuel, power prices next month'

The Jakarta Post, Jakarta

Coordinating Minister of the Economy Dorodjatun Kuntjoro-Jakti said Thursday the government would raise fuel prices and power tariffs next month in line with an agreement with the House of Representatives.

"The fuel prices and power tariffs will be increased in January because it was supported in the House," Dorodjatun said after a Cabinet meeting.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro was earlier quoted by some local papers as saying that the government would raise fuel prices on Jan. 1 but the minister said Wednesday that the government would not raise the fuel prices on that day.

He did not reveal, however any timeframe for the fuel price increase.

Separately, Rachmat Sudibyo, director general of oil and gas at the ministry of energy and mineral resources, said Thursday a government team comprising several ministries is discussing the new fuel pricing scheme as well the fixed schedule for the introduction of a new pricing scheme.

He noted however any further delay in raising the fuel price would add subsidy burdens to the government.

"The government must add Rp 33.3 billion in fuel subsidies if we delay raising the fuel price for a day or a total of Rp 1 trillion if we delay it for one month," he said.

The total fuel subsidy is set at Rp 30.37 trillion in the 2002 state budget, with fuel consumption of 52.77 million kilo liters.

Should the price increase be delayed for one day, the fuel subsidy will rise by Rp 0.6 to Rp 576.1 per liter, up from Rp 575.5 per liter.

The government said, three months ago, it would raise fuel prices by an average of 30 percent in January 2002 to cut the subsidy burdens on the 2002 state budget.

The government has also agreed with the House to allow PLN to raise its power tariff by six percent for every quarter of next year.

Rachmat said the government's team has agreed not to increase kerosene prices higher than 30 percent because kerosene is mainly used by low-income people. At present, gasoline prices are at Rp 400.

Diesel oil might be significantly increased to discourage smuggling, he said. Diesel oil is the type of fuel which is most often smuggled out of the country.