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.