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)