Govt to raise fuel subsidy to Rp1.1t

The government is to increase the fuel subsidy for lower income groups by Rp300 billion, raising it from Rp800 billion to Rp1.1 trillion, while the proposed fuel price hike will take effect as of October 1, 2000.

Secretary General of the Mines and Energy Ministry Rahmat Sudibyo said the decision was made after his ministry, in conjunction with the Ministry of Cooperatives and the Ministry of Housing and Regional Infrastructure Affairs, held a closed meeting yesterday.

"After further calculations we decided that the subsidy for lower income groups will be raised from Rp800 billion to Rp1.1 trillion," Sudibyo was quoted as saying by DetikCom.

Sudibyo added the fuel price hike will be effective as of October 1, 2000, which effectively answers the question of when the government will raise fuel prices. Earlier rumors had it that the price hike was to be imposed without prior notice.

Asked on how the government proposed to implement the subsidy for lower income groups, Sudibyo declined to comment.

"The Department of Mines and Energy has no authority over this matter. Our job was only to make recommendations or policies, in terms of calculating the fuel price," he said.

Meanwhile, a Mines and Energy Ministry senior official, Iin Arifin Tahyan, confirmed the government will raise the fuel subsidy for lower income groups from Rp800 billion to Rp1.1 trillion. He added the shortfall of Rp300 billion needed for the subsidy will be financed by windfall profits from high crude oil prices.

Iin added Indonesia will enjoy around Rp11 trillion in windfall profits as a consequence of the surge in oil price from US$22 per barrel to US$35 per barrel. "We will cover the Rp300 billion deficit from this revenue," he said.

Confirmation could not be sought from Minister of Mines and Energy Purnomo Yusgiantoro as he left the building shortly after the meeting. (*)