House demands fuel price hike review

JAKARTA (JP): The House of Representatives demanded yesterday that the government review the May 5 increases in the prices of fuel and electricity, calling the measures completely insensitive to the people already suffering enormously because of the economic crisis.

Members of House Commission V for industry and trade, mines and energy told a packed working session with Minister of Mines and Energy Kuntoro Mankusubroto that the price increases were not only ill-timed but also legally suspect because they had been effected without going through proper procedures.

"While the government has pumped Rp 107 trillion (US$11 billion) into subsidized liquidity credits to bail out ailing banks, it is not willing to spend only Rp 16 trillion in fuel subsidies for the majority of the people," Hamzah Haz, Chairman of the Moslem-oriented United Development Party faction said.

The increases of between 25 percent and 71.43 percent in fuel prices and 20 percent in electricity tariffs came into effect on Tuesday through two Presidential decrees. They set off steep rises of up to 60 percent in transportation fares which will certainly trigger price rises of almost all products.

The House members, who usually are pliant and simply approve whatever measures are implemented by the government, seemed defiant and excessively critical yesterday.

Even members from the ruling Golkar party came out strongly against the policy, demanding the revocation of the Presidential decrees which effected the price rises.

About 35 of the 63 commission members raised their hands when the chairman of the meeting opened the session for questions. The meeting, which started at 9 a.m. continued until 11 p.m..

Priyo Budi Santoso of Golkar went as far as challenging the whole cabinet, especially Kuntoro, to resign if they could not get the price increases retracted.

"We had warned Kuntoro to be extra careful about the timing of any decision to raise fuel prices and to consult with the House before taking such a decision," deputy chairman of the Golkar faction, Slamet Effendy Yusuf, said.

Kuntoro, looking subdued and sad, explained the economic reasons behind the price increase, citing the more-than-70- percent depreciation of the rupiah since July as the primary factor.

He conceded it was the best of several bad alternatives the government had had in order to cope with the severe financial distress of PT Pertamina and PT PLN and to protect the state budget from an exploding deficit.

"It was inevitable. I should apologize if the honorable House members feel slighted by this measure and the manner in which it was taken. But it has never been my intention to disregard the House," Kuntoro told the meeting.

Kuntoro is one of the few recruits to the new cabinet appointed last March who has gained high respect from the public for his integrity and technical competence.

The legislators blamed what they saw as gross inefficiency within the state oil and gas company Pertamina and state electricity company, PLN, for the rises.

Another Golkar member, Samsudin Abbas, said the price increases were made through a decision which was legally flawed. The government should have consulted with the House first, as a high state body which represents the rights of the people.

Golkar's Priyo Budi Santoso earned applause from spectators when he called on the minister to step down if he failed to have the price increases retracted.

"If the price increases are not annulled, I think we shall never be able to ease the pains of the people any longer. I therefore propose that either I and other House members or the whole cabinet resign," Priyo said.

A heated debate ensued when Priyo questioned Pertamina's efficiency in importing fuel products and crude oil and alleged that its subsidiaries had marked up the prices of the crude oil and fuel they imported by US$10/barrel to rake in huge commissions.

Indonesia, though a net oil exporting country, still imports between 15 percent and 20 percent of its annual fuel consumption of 52 million kiloliters and 70 million barrels of crude, from the Middle East.

Pertamina exports and imports crude oil and fuel through three marketing arms: Pacific Petroleum & Trad Co. Ltd, which is 50 percent owned by Pertamina; Perta Oil Marketing Oil Ltd (30 percent owned by Pertamina) and Permindo Trading Oil Co. Ltd (35 percent owned by Pertamina).

Priyo alleged Perta and Permindo had marked up the prices of their fuel and crude oil imports up to US$10 per barrel to obtain a bigger commission. This had inflated Pertamina's production costs, thereby increasing the prices of its fuel products.

But Pertamina's president, Soegianto, denied the allegation, saying the companies earned only 10 U.S. cents commission per barrel.

Priyo then asked Soegianto to name the other shareholders of Permindo and Perta.

"No I won't disclose them," Soegianto said after a few minutes of whispered consultations with his staff, which prompted an uproar from the spectators.

After minutes of heated debates with other House members, Soegianto promised to reveal the names of the shareholders through a letter to be sent to the commission's chairman, Marzuki Achmad.

An informed source at the House said yesterday the remaining 70 percent stake in Perta is owned by several foundations linked to top political leaders and the other 65 percent stake in Permindo is owned by the Bimantara Group, controlled by President Soeharto's son Bambang Trihatmodjo, Soeharto's cousin, Sudwikatmono and Nirwan Bakrie. (jsk)