'Less than 20% hike won't affect land transport'

Rendi A. Witular, The Jakarta Post/Jakarta

The Ministry of Transportation has assured the public that there will not be any increase in tariffs for inter-city land transport if the government does not increase fuel prices by more than 20 percent.

"Inter-city land transport tariffs will not increase following the fuel price hike, if it is less than 20 percent," minister Hatta Radjasa told a press conference on Friday.

He explained that land transport has a floor price set at Rp 60,000 (US$6.50) per 100 kilometers per passenger, and a ceiling price of Rp 90,000 per 100 km per passenger.

Speaking on city transportation tariffs, Hatta said that such decisions would be made by respective local administrations.

The announcement is deemed necessary because public transport users will be the ones most affected by the planned fuel price hike, which is slated to be announced before April 1 according to Coordinating Minister of the Economy Aburizal Bakrie.

Hatta also said that his ministry would also make decisions on any increases in water transport passenger tariffs.

But State Minister of National Development Planning Sri Mulyani Indrawati said later that the fuel price hike would lead to a rise in all tariffs for transport by between 15 percent and 20 percent.

She also said that fuel prices would in all likelihood be raised by 30 percent on average.

The National Development Planning Board, of which Mulyani is the chairwoman, is responsible for studying options to reduce the government's oil subsidy burden, including calculating fuel price hikes.

The government has already raised the retail price of high quality gasoline brands Pertamax and Pertamax Plus to Rp 4,000 per liter and Rp 4,200 per liter, or by 63.3 percent and 52.7 percent, respectively, on Dec. 19.

Surging global oil prices cost the government Rp 62.8 trillion in fuel subsidies last year.

Increases in fuel prices will eventually cause prices of other commodities to increase.