House delays decision on fuel subsidy
JAKARTA (JP): The House of Representatives state budget task force delayed on Tuesday taking a crucial decision over the government proposal to raise fuel prices by an average of 30 percent because officials from the state oil and gas company Pertamina did not show up at the meeting between the task force and the finance ministry.
Legislators also expressed disappointment because Minister of Mineral Resources and Energy Purnomo Yusgiantoro, who has been overseas for an OPEC meeting in Vienna, only sent expert staff and not senior officials of the ministry.
Purnomo and Pertamina president Baihaki Hakim, who also attended the OPEC meeting, should have accompanied Finance Minister Prijadi Praptosuhardjo at the meeting with the House.
"We're disappointed with the absence of Pertamina. This is contempt of parliament," said legislator Rizal Djalil at the meeting, which had been running for more than two hours before legislators found out that no Pertamina officials could be reached to confirm technical data.
Legislators then agreed to hold another meeting on Tuesday afternoon to come up with a final decision, but demanded that both Pertamina and the ministry of mineral resources and energy must send their key people.
The government has proposed to increase fuel prices by an average of 30 percent in the middle of this month as part of measures to cut state budget spending to help limit the 2001 budget deficit to a safer level of around 3.8 percent of gross domestic product (GDP).
The current budget deficit could widen to a dangerous level of 6 percent of GDP due to the sharp plunge in the exchange rate of the rupiah against the U.S. dollar and rising domestic interest rates.
Raising fuel prices by cutting subsidies on the commodity is a politically sensitive measure which must obtain the support of the House to be implemented successfully.
The House state budget task force includes legislators from various related commissions of the House.
Commission VIII on mining and energy, which has been tasked to initiate a preliminary debate over the government proposal on the fuel subsidy issue, has suggested that fuel prices be increased by an average of around 27 percent by reducing this year's fuel subsidy to around Rp 53.5 trillion compared to the government proposal of Rp 60.8 trillion.
According to the commission's recommendation, the price of premium gasoline should be raised by around 17 percent to Rp 1,350 per liter, kerosene increased by 14 percent to Rp 400 per liter and automotive diesel fuel by 50 percent to Rp 900 per liter.
"The price increase of the three components is equal to an average increase of more than 27 percent," said a Commission VIII legislator.
The legislator added that the price of industrial diesel was proposed to be increased by 103 percent to Rp 1,115 per liter, and bunker fuel by 106 percent to Rp 825 per liter.
The commission's recommendation is based on the assumption that 2001 domestic fuel consumption is at around 51.8 million liters.
The recommendation of the commission is subject to the approval of the House state budget task force.
Some members of the task force, however, rejected the recommendation made by the commission, saying that the fuel consumption assumption was too high, which would translate into a greater budget for fuel subsidy. (rei)