No fuel price hike on Jan. 1, minister says
No fuel price hike on Jan. 1, minister says
The Jakarta Post, Jakarta
The government will not raise fuel prices on Jan.1 as earlier
expected, because the planned increase is still being examined to
take into account of a number of variables, including the latest
developments in international oil prices, according to Minister
of Energy and Mineral Resources Purnomo Yusgiantoro.
"Fuel (prices) will not increase on January 1, 2002. We're
still reviewing it from a number of angles, including the impact
on (economic) sectors and the changes in international oil
prices," Purnomo told reporters on Wednesday during a post-Idul
Fitri gathering.
The government said three months ago that it would raise fuel
prices by an average of 30 percent in January next year as a
consequence of a cut in the fuel subsidy, needed to help reduce
the burden on the 2002 state budget.
The policy is also part of an agreement with the International
Monetary Fund.
The House of Representatives has approved the 2002 state
budget, under which the fuel subsidy will be reduced to Rp 30.37
trillion (US$3.03 billion) from the estimated Rp 56.2 trillion-Rp
56.6 trillion for this year. The budget, however, does not
specify when the fuel price hike will take place.
But the public has assumed that the increase would be
implemented on Jan. 1.
Raising fuel prices has been a politically sensitive issue in
this country, as it leads to increases in the price of various
basic goods and lifts transportation costs. The former
authoritarian president Soeharto was toppled in 1998 partly due
to the fuel price policy in place at the time.
Purnomo said that the government was also still calculating
the size of a compensation fund to be allocated to the poor, who
would be the hardest hit by an increase in the price of fuel.
He added that the government was also still discussing better
ways to communicate with the public about the policy.
The fuel price hike plan is based on the assumption of an
average international price of $22 per barrel. However, crude
oil prices are currently hovering at around $19 per barrel.
Meanwhile, non-governmental organizations opposed the planned
increase, saying it would only add a further burden to the
public, which was already suffering as a result of the three-year
economic crisis.
"This (policy) clearly disregards the public interest," said
Arimbi Heroepoetri of the Coalition of Civil Society for Public
Policy.
Retno Widiastuti, executive secretary of the Indonesian
Consumer Protection Foundation (YLKI), said that the fuel price
hike would impose too large a burden on the community, as
electricity prices and telephone tariffs were also set to
increase next year.
Retno also lambasted the government for not providing a clear
and transparent explanation of the fuel price policy.
She pointed out that the government had never revealed to the
public the results of an audit of the policy.
"There has never been a clear and transparent explanation.
Has the compensation (program) for the poor been running
properly? What about fuel smuggling? Are they able to deal with
it?"
Elsewhere, Purnomo said that the government would propose
certain measures at this week's Organization of Petroleum
Exporting Countries (OPEC) meeting in a bid to boost oil prices
to the cartel's price range target of $22-$28 per barrel.
The first proposal would be an OPEC production cut of 1.5
million barrels per day (bpd) starting in January, although non-
OPEC countries had not yet given a commitment to reduce their
output by 500,000 bpd as demanded by the cartel.
The second proposition would be a proportional cut using a 3:1
ratio, depending on the output cut made by non-OPEC countries,
meaning that, should non-OPEC countries only slash production by
300,000 bpd, OPEC should only cut by 900,00 bpd, Purnomo said.
Fuel Subsidy
Fuel subsidy -- 2002: 30.37t, 2001: 56.2-56.6t*
Fuel consumption(kiloliters) -- 2002: 52.77m, 2001: 54.6m
Oil price (US$/barrel) -- 2002: 22, 2001: 24
Total budget -- 2002: 344t, 2001: 340.32t
(*an estimate after actual domestic fuel consumption for the year
increased by 1.9 kiloliters from 52.77 million kiloliters).