Govt to raise fuel prices by 28.7 per cent

Government said on Wednesday fuel prices will be hiked by an average 28.7 percent, despite widespread protests against the move ahead of elections next year.

The price increase is designed to limit the impact of record world oil prices, which are blowing out the Government's multi-billion-dollar fuel subsidy scheme and sucking state money out of social programmes.

"The figure is relatively final, it will be 28.7 per cent," Finance Minister Sri Mulyani was quoted as saying on Antara news agency.

It is the first time a senior minister has put a figure on the price hikes, which have sparked almost daily protests since the Government announced its intention to slash fuel subsidies earlier this month.

She did not say when the new price regime would be implemented, only that it would not be introduced until the Government had finalised a package of measures designed to offset the impact on the poor.

A 28.7-per cent rise would see the cost of premium gasoline climb to 5,790 rupiah (65 cents) a litre from the current price 4,500 rupiah.

President Susilo Bambang Yudhoyono says the move is essential to rein in the budget deficit and free up funds for spending on social programmes and the country's crumbling infrastructure.

But the Government is facing mounting opposition from the street as well as parliament, where most parties have turned against the plan in a bid to win favour with voters ahead of the elections.

Indonesia last raised its fuel price by 126 per cent in 2005, sparking widespread protests.

The Government chose to announce the latest average price rise on the 10th anniversary of the fall of former dictator Suharto, who resigned under the weight of a mass protest movement sparked by a fuel price rise.

Thousands of demonstrators took to the streets around the country earlier Wednesday to condemn the Government's plans and demand protection from surging commodity prices. (*)