Govt won't increase fuel prices

Rendi A. Witular, The Jakarta Post, Jakarta

The President has said the government will not increase domestic fuel prices this year even though the state budget may suffer from ballooning subsidy spending due to soaring global oil prices and rising domestic demand.

President Susilo made his statement during an impromptu visit to state oil and gas firm Pertamina's fuel depot in Plumpang, North Jakarta, on Friday.

"Although the government has to shoulder the burden of huge fuel subsidy spending this year, there is no plan whatsoever to raise fuel prices again. The government will seek ways to ensure that the increased subsidy spending will not derail the state budget," he said.

The government increased fuel prices by an average of 29 percent starting March 1 to cut the budget deficit. However, the decision was widely criticized by the public as it led to corresponding increases in the cost of transportation and food.

Susilo had said earlier that the government would have to spend some Rp 110 trillion (US$10.2 billion) on fuel subsidies this year, up from the Rp 78 trillion allocation already approved by the House of Representatives.

Accompanied by Minister of Energy and Mineral Resources Purnomo Yusgiantoro and Cabinet Secretary Sudi Silalahi during his visit, Susilo ordered Pertamina president director Widya Purnama -- who remains at the helm following a decision to this effect by the firm's shareholders at its annual meeting last Friday -- to ensure adequate domestic supplies to prevent fuel shortage, and to crack down on fuel smuggling and adulteration.

Pertamina director for marketing Arie Soemarno said that as of June 30, the company and law enforcers had investigated 38 cases of illegal fuel trading worth over Rp 100 billion.

Susilo also urged Pertamina to alleviate public disquiet in Medan, North Sumatra, arising out of fuel shortages resulting from the hoarding of fuel by speculators following rumors to the effect that the government would soon raise prices.

"Many rumors are circulating and these have been causing public among members of the public, including in Medan. I call on the public not to panic in the face of the current fuel shortages as the government is trying to resolve them," he said.

According to Pertamina, there are five provinces currently facing fuel shortages, compared to 10 provinces last month.

The firm said that fuel stocks were still only sufficient for 18 days, less than the perceived safe level of 22 days.