Minister hints at rise in fuel, electricity prices

Minister hints at rise in fuel, electricity prices

JAKARTA (JP): Minister of Mines and Energy Susilo Bambang
Yudhoyono hinted on Monday that fuel and electricity prices would
be increased in April to reduce their combined subsidies to Rp
22.3 trillion (US$3 billion).

Speaking to reporters following a meeting with senior economic
ministers, Bambang said domestic fuel prices would be raised to
cut down their subsidies to Rp 18.3 trillion from an estimated Rp
27 trillion in the current 1999/2000 fiscal year ending in March.

But he declined to elaborate.

"There will be a significant decline in fuel subsidies, so
fuel prices have to be adjusted," he said.

The government has recently indicated it would raise fuel
prices by around 20 percent in the next state budget.

The government is scheduled to present the 2000 state budget
beginning in April to the House of Representatives on Thursday.

Differing from the past, the next fiscal year will last for
only nine months until December, as the government will change
its base to the calendar year beginning in January, 2001.

Bambang said the planned increase in the fuel price would take
into account the purchasing power of the majority of the people.

"We don't want a dramatic increase in fuel prices which could
cause disruption to the economy and cause a huge burden on the
people," he added.

He also said the government would set aside Rp 3.9 trillion in
electricity subsidies in the next state budget, much lower than
the estimated Rp 20 trillion in the current fiscal year.

The government has indicated it would raise electricity
tariffs by around 35 percent.

Separately, Chief of the Central Bureau of Statistics (BPS)
Sugito Suwito said inflation in the first quarter of this year
was projected to be between 3 and 4 percent because of the
planned increase in fuel prices and electricity tariffs.

"But the exact figure will depend on the increase in the fuel
prices and electricity tariffs," Sugito told reporters after the
economic ministers' meeting.

He added the planned increase in the salary of government
employees would also affect inflation.

BPS forecast inflation this year to be around 5 percent,
compared to 2.01 percent in 1999. Indonesia suffered hyper
inflation of more than 77 percent in 1998 when the economy
plunged to its worst level during the economic crisis.

Pertamina

Meanwhile, Bambang said the Pertamina board of commissioners
would meet on Tuesday (today) to discuss candidates for the new
president of the state oil and gas firm.

He said the board was expected to select one name by this
month to replace Pertamina president Martiono Hadianto.

He said the board would make the selection based on the three
criteria proposed by President Abdurrahman Wahid and other
criteria set by the board.

Wahid said earlier he expected the new Pertamina president to
be someone who is honest, able to conduct transparent management
and capable of leading Pertamina in an era of global competition.

Several names have been tipped to be the new Pertamina
president, including legislators Arifin Panigoro and Hatta
Radjasa, PT Caltex Indonesia's president Bhaihaki Hakim and
president of state gas distributing firm Perum Gas Negara (PGN)
A. Qoyum Tjandranegara.

Arifin is the owner of oil and gas firm PT Medco Energy, while
Hatta owns oil drilling firm Bormindo.

Bambang said the candidates were proposed by the public and
board members.

Pertamina board of commissioners is chaired by Bambang and
includes senior economics ministers as members. (rei)