Government delays increase in fuel prices

President Abdurrahman Wahid delayed on Friday the plans to raise fuel prices until the government was ready to implement the subsidy system.

Abdurrahman said in a press conference that the increase in fuel prices would be realized if the cabinet deemed that the government was ready to channel fuel subsidy to the poor and other intended groups.

He said that the cabinet would make a review every week at a cabinet meeting.

The government initially planned to raise fuel prices this month, but prices of kerosene for the poor and prices of gasoline premium and automotive diesel for public transportation would be unchanged as the government would provide subsidy either through coupon or direct transfer of cash to the poor and public transportation operators.

There has been increasing calls including from legislators for the government to delay the planned increase in fuel prices on grounds that the government doesn't seem to be ready to implement the subsidy system.

The government first announced that it would provide coupon for the targeted groups, but latter changed its mind by introducing a direct cash transfer.

Many speculators had also piled up kerosene in the run up to the planned fuel price increase, causing the poor families to find difficulties in purchasing the fuel product.

Meanwhile, the Bisnis Indonesia daily quoted World Bank country director for Indonesia Mark Baird as saying that the Bank supported Abdurrahman's decision to delay the fuel price increase until the government was ready with implementing the subsidy system.

But Baird stressed that raising the fuel price was crucial for the country to develop an efficient economy and oil and gas sector.

Separately, the paper quoted deputy chairman of the National Development Planning Agency (Bappenas) Muhammad Abduh as saying that the government was actually ready to implement the subsidy system.

He pointed out that the government had a three-year experience in implementing a social safety net program by channeling aid to the poor during the economic crisis period.

"I can't understand why people are saying that we're not ready in channeling the subsidy. We have a three-year experience with the social safety net program," he said. (*)