Susilo confirms oil price rise effective Oct. 1

Susilo confirms oil price rise effective Oct. 1

Rendi A. Witular, The Jakarta Post, Jakarta

President Susilo Bambang Yudhoyono confirmed on Friday that the
government would increase fuel prices starting Oct. 1 after it
had completed the preparatory stage of programs to improve the
welfare of the poor.

"The decision is taken to reduce our state budget burden,
resulting from the larger subsidy due to higher global oil
prices," he said.

He did not specify by how much fuel prices would be increased.
However, State Minister of National Development Planning Sri
Mulyani Indrawati said last week that fuel prices would go up by
at least 50 percent.

Susilo hoped that by the time of the increase, programs to
improve the welfare of people in the low-income bracket would be
established and working effectively.

The government has set aside Rp 4.8 trillion (US$470 million)
this year for easing the burden on the poor when the government
increases fuel prices as a result of slashing the fuel subsidy.

People with an individual monthly income of less than Rp
175,000 will be entitled to Rp 100,000 per month. The money will
be disbursed through post offices and branches of Bank Rakyat
Indonesia (BRI).

According to the latest data from the Central Statistics
Agency (BPS), there are about 15.5 million households, or 62
million people, living slightly above, on or below the poverty
line.

Susilo said his administration would not follow the ways of
the previous government by announcing the fuel price increase in
the middle of the night, without disseminating information to the
public first.

"I am announcing the date because I don't want the public to
be in shock when we actually raise the fuel prices. For sure, we
won't announce it in the middle of the night as happened in
previous years," he said.

Coordinating Minister for the Economy Aburizal Bakrie said the
exact figure of the fuel price increase would not be announced
until its approval by the House of Representatives plenary
meeting, scheduled for Sept. 27.

"We are not trying to cover anything up. We are still waiting
for the House to set out the fuel subsidy allocation. We may
announce it after the House approves it," he said.

At a hearing on the second and final revision of the 2005
state budget on Tuesday, the House Budget Committee decided to
earmark the fuel subsidy at Rp 89.2 trillion, rather than the
alternative of Rp 113.7 trillion, arguing the government would
have "more room to increase fuel prices".

With the government having disbursed Rp 78 trillion to
subsidize fuel as of August, it has no choice but to raise fuel
prices to keep the cost of the fuel subsidy in check so that it
does not exceed the full-year target of Rp 89.2 trillion.