Govt to raise fuel prices for industry

Govt to raise fuel prices for industry

JAKARTA (JP): The government decided on Monday to raise fuel
prices for industries by 50 percent up to 100 percent on April 1
but keep kerosene and fuel prices at gas stations unchanged until
October to protect the poor.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro
told reporters at his office that the Cabinet's meeting on Monday
decided to postpone price increases for kerosene, automotive
diesel oil and gasoline sold at gas stations until Oct. 1 to
prevent the already fragile social political situations from
worsening.

Under the plan agreed to by the Cabinet, starting on April 1
state oil and gas monopoly Pertamina will sell fuel to all
foreign investors in the mining and petroleum sectors, as well as
foreign-flagged ships, twice as high as the current price.

According to Purnomo, foreign mining and petroleum investors,
and foreign-flagged ships account for 0.3 percent of the
country's annual fuel consumption, which stood at about 51
million kiloliters last year.

The Cabinet also decided to increase on April 1 the fuel price
by 50 percent for other industrial customers, including the
fishing industry which has staged many campaigns to oppose such a
discriminative pricing.

Purnomo said industrial consumers account for about 23 percent
of national fuel consumption.

The remaining 76.5 percent of Pertamina's fuel supplies are
consumed by households and transportation firms.

In accordance with the state budget, the government must raise
fuel prices for all consumers by an average of 20 percent on
April 1 to cut the government's subsidy burden by Rp 4.3 trillion
(US$409 million) to 41.3 trillion this fiscal year.

The decision to delay fuel price increases for the poor was
made amid growing pressure from students for President
Abdurrahman Wahid to resign.

Purnomo said the policy to maintain fuel prices at gas
stations was actually aimed at providing public transportation
with cheap fuel, but the government could not prevent affluent
car owners from buying fuel at the stations.

The government has instead decided to impose some additional
taxes on car owners in compensation for fuel subsidies they enjoy
at gas stations, Purnomo said.

"But the government is still studying the type and the amount
of the new taxes on car owners," Purnomo said.

Purnomo said that although the government would not raise
kerosene prices and fuel prices at gas stations on April 1, it
was still optimistic to cut fuel subsidies by Rp 4.3 trillion
this year as planned in the state budget, owing to the price
increases for industrial users.

Purnomo said the government would implement a tight monitoring
and supervisory scheme to ensure that the three-tier fuel pricing
scheme would be implemented properly.(bkm/jsk)