No deadline set for delay in fuel price hike: Minister

No deadline set for delay in fuel price hike: Minister

JAKARTA (JP): The government and the International Monetary
Fund (IMF) have agreed to delay fuel price increases for an
indefinite period, Minister of Mines and Energy Susilo Bambang
Yudhoyono said on Tuesday.

"What's important is how we prepare ourselves and the people
for the implementation of a support mechanism to protect poor
people from the increase in fuel prices," Bambang said following
a meeting with economic ministers and representatives of the IMF.

The government initially planned to raise fuel prices by an
average of 12 percent on April 1, but mounting public opposition
forced President Abdurrahman Wahid to delay the plan.

The last time the government raised fuel prices in 1998
provoke massive rioting, helping toward the resignation of former
president Soeharto.

"So while we wait for the cut in fuel subsidies, the
government will continue to prepare itself," Bambang said.

The government planned to protect the poor from the price
increase by channeling cash aid of Rp 350 billion (US$43 million)
directly to them through post offices across the country.

Director general of oil and gas at the Ministry of Mines and
Energy Rachmat Sudibyo said last week the government was prepared
to hike fuel prices within three months as of April 1.

The fuel price increases are included in the letter of intent
signed by the IMF and the government to cut fuel subsidies in the
April-December 2000 state budget.

Rachmat said the IMF's letter referred only to an increase in
fuel prices within this year, without specifying a date.

However, he added, the delay would cost the government about
Rp 250 billion in additional fuel subsidies each month.

Economists were of the opinion the public would accept the
increase in fuel prices provided that the state-owned oil and gas
company Pertamina operate more efficiently.

An audit of Pertamina by PriceWaterhosueCoopers for the period
from April 1996 to March 1999 revealed inefficient practices and
losses of income opportunities at the state company amounted to
some $4.69 billion.

Pertamina has frequently blamed existing regulations for
causing many of the inefficiencies and hampering its growth.

By law, Pertamina is subject to taxes of 60 percent, far
higher than any company.

Pertamina president Baihaki Hakim said revising current oil
and gas regulations was the company's highest priority in
restructuring the company.

The IMF in its letter of intent also made the replacement of
the current oil and gas law and the restructuring of Pertamina as
prerequisites in obtaining its financial aid.

Bambang went on to say the government would officially propose
a new oil bill to the House of Representatives in June.

He said the forthcoming letter of intent would also require
Pertamina to submit progress reports on its restructuring
programs to the government every quarter.

The previous government, with Kuntoro Mangkusubroto as
minister of mines and energy, proposed to the House an oil and
gas bill last year aimed at revoking Pertamina's oil and gas
monopoly.

But the House shot down the bill, insisting that the company
should maintain its monopoly rights.(bkm/rei)