Kuntoro foresees no price rises for fuel, power

JAKARTA (JP): Minister of Mines and Energy Kuntoro Mangkusubroto promised on Friday that the government would not increase prices of most fuel products on the domestic market during the coming 1999/2000 fiscal year.

Kuntoro also said he did not expect that the government would have to increase electricity tariffs in 1999/2000 either.

"With fuel subsidies for the 1999/2000 budget amounting to Rp 10 trillion (US$1.3 billion), the government is very unlikely to raise fuel prices," he said at a weekly press conference.

The government has allocated Rp 27.5 trillion in fuel subsidies for the current fiscal year.

He said the government would lift subsidies for jet fuels later this month, but would maintain those on widely-used products such as gasoline, kerosene and diesel fuel.

The government initially increased fuel prices by up to 71.34 percent last year and power prices by 20 percent in mid-year as a condition of being granted bailout loans from the International Monetary Fund.

But, the price increases incited riots in several big cities, including the capital of Jakarta, forcing the government to review them. Those riots led to the resignation of President Soeharto after 32 years in power.

The government expected revenue from oil and gas operations to drop by 57.8 percent to Rp 21 trillion for the 1999/2000 fiscal year from Rp 49.7 trillion in the current fiscal year following the slump in oil prices.

The government projected oil prices to average $10.5 per barrel in the next fiscal year, down from the average $12.4 per barrel in the current fiscal year.

Kuntoro said the government did not expect oil prices to further fall this year in view of the mounting awareness among oil producers of cooperation in improving oil prices.

"Oil producers -- both members of the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC members -- have interests in correcting the current prices," Kuntoro said.

He said foreign analysts predict oil prices would improve to between $12 and $16 this year.

Kuntoro, however, did not give any explanation of his prediction that the electricity tariff would not increase in the next fiscal year.

Nevertheless, he said earlier the government planned to raise electricity tariffs for households with a power consumption of over 6,000 watts.

Meanwhile, state-owned electricity firm PT Perusahaan Listrik Negara (PLN) has just reported a net loss of at least Rp 5.9 trillion for last year because its operating costs exceeded its income. (jsk)