Government, House start discusing fuel price hike

The government and the Commission VII of the House of Representative overseeing energy sector on Tuesday started a hearing on the plan to raise fuel prices. The government was proposing two policy scenarios to avoid a balooning state budget deficit amid soaring crude oil prices, The Jakarta Post reported.

Addressing members of the House of Representatives Commission VII , Energy and Mineral Resources Minister Jero Wacik said the two options were either to raise subsidized fuel prices by Rp 1,500 (16 US cents) a liter or lowering the amount of subsidy to a fixed figure of Rp 2,000 a liter.

To lessen the impact of a fuel price hike on people's purchasing power, Jero said the government would implement four types of compensation programs: direct cash assistance for the poor, special subsidies for public transportation, a bigger budget allocation for the rice-for-the-poor program and education subsidies for low-income families.

Jero said the subsidies for public transportation could be in the form of transportation coupons for students and for the operators the subsidy could be in the form of lower processing costs of the motor vehicles registration.

Coordinating Economic Minister Hatta Rajasa said the government would also try to reduce annual government spending by Rp22 trillion. ?We are going to cut back on non-essential spendings, such as office expansions, cars and working trips, as efforts to make meaningful saving in the budget,? he said.

Opposition to the government plan to raise fuel prices is building up at the House, with some lawmakers alleging that there is a hidden political agenda behind the programs to compensate for the fuel-price hikes.

?I am afraid that the aid refers to direct cash assistance, which was used as a tool to win the previous presidential election,? People?s Conscience Party (Hanura) lawmaker Akbar Faisal said. (*)