Government sticks with cash transfer fuel subsidy system

The government would continue with its plans to use a cash transfer system as a means to provide fuel subsidy for poor families and public transportation companies, the daily Bisnis Indonesia reported on Wednesday.

The paper quoted director general of oil and gas at the Ministry of Mines and Energy Rachmat Sudibyo as saying that the cash transfer system was the best option compared to the coupon system.

The government initially planned to provide coupon to the poor families to buy kerosene and to public transportation firms to purchase gasoline and automotive diesel.

The government planned to raise fuel prices by an average 12 percent, but the government is also determined to protect the poor and public transportation by providing subsidy.

But President Abdurrahman Wahid delayed the planned increase in fuel prices - initially set for early this month - saying that the policy would be implemented once the government was ready to implement the fuel subsidy system.

There's been concern of possible abuse in the fuel subsidy system. But many also said that the delay was made because of rising public protest over the plans.

Meanwhile, Minister of Mines and Energy Susilo Bambang Yudhoyono said on Monday that the decision to delay the increase in fuel prices was the right step amid increasing protest from the public.

He appealed to the people to understand the necessity to raise fuel prices.

Susilo said that he didn't know when the government would raise the fuel prices.

Separately, social analyst Agus Pambagio was quoted by the Kompas daily as saying that the public protested the planned increase in fuel prices particularly because of huge inefficiency at the state oil and gas firm Pertamina.

Agus said that the government must first improve the efficiency at Pertamina before the fuel price was increased.

He also demanded Pertamina to be transparent particularly with its cost structure in fuel production. (*)