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)