Minister says fuel price hikes will not be too hefty: Report

Indonesia's chief economics minister said on Wednesday domestic fuel price hikes scheduled for this month would not be too hefty and would "amaze" a population expecting a 30 percent average increase.

In an interview with Reuters, Dorodjatun Kuntjoro-Jakti refused to be drawn on the exact date of the increase this month or the amount of the rise, but said weaker world oil prices had given Indonesia room for flexibility.

Jakarta has been raising domestic fuel prices periodically to cut costly oil subsidies, but the hikes are sensitive issues in the poverty-stricken country and have triggered social unrest in the past partly because of their impact on public transport.

"We are not talking about a jump, a hefty jump in the price of gasoline...What is expected by the public is not going to be that large...It's going to amaze them," Dorodjatun said.

Asia's only OPEC member has said it aims to cut oil subsidies in the 2002 budget to 30.4 trillion rupiah ($2.92 billion) from 53.8 trillion rupiah last year, mainly through the price hikes.

The subsidies for this year are based on an assumed budget price of $22 a barrel. However, OPEC's crude basket is currently less than $20 a barrel.

In October Indonesia's parliament approved an average 30 percent increase in domestic fuel prices for this year.

Jakarta ultimately wants to remove oil subsidies in a bid to ease budget costs.

The oil subsidies for 2001 amounted to nearly 16 percent of total forecast budget expenditure. The original 30 percent hike had been forecast to reduce that to nine percent this year. It was unclear if the fresh hike would have the same impact. (*)