Indonesia raises fuel prices nearly 30 pc to avert crisis
Indonesia has raised prices at the pump by nearly 30 per cent because of the surging cost of oil and gas on the global market, the government said.
By Agencies |
JAKARTA: Indonesia has raised prices at the pump by nearly 30 per cent because of the surging cost of oil and gas on the global market, the government said.
President Susilo Bambang Yudhoyono warned earlier this month that budget-busting subsidies, which have for years enabled motorists to fill up for roughly US$1.80 (euro1.14) a gallon, would have to be drastically slashed.
Most people realize he had little choice, but that has not stopped thousands of students from taking to the streets in near-daily rallies this week, saying the poor would be hit the hardest.
Energy Minister Purnomo Yusgiantoro said Friday that gas prices were being boosted 33 per cent to US$2.40 (euro1.52) a gallon. Diesel oil jumped 27 per cent to US$2.25 (euro1.43) a gallon. And kerosene, used primarily for cooking, rose 25 per cent to US$1.00 (euro0.64).
``The rise in world oil prices and the rise in our fuel subsidies ... has burdened the state budget,'' Yusgiantoro told a news conference following a meeting with Yudhoyono. ``Therefore, we needed to adjust prices.''
Indonesia's 2008 budget was drafted using an average oil price of US$85 a barrel for the whole year - a figure later revised to US$95. When prices topped the US$100 mark, the cost of protecting consumers threatened to destabilize the already beleaguered economy.
Subsidies put in place during the 32-year dictatorship of Suharto, who was ousted in 1998 amid massive protests, were aimed at protecting the country's most vulnerable.
The move is politically risky, coming ahead of general elections early next year.
Although it will help ease pressure on the budget, the hikes are also expected to push up the price of everything from rice to bus fares in the sprawling nation of 235 million people, half of whom live on less than US$2 a day.
``Of course, I'm against it,'' said Rahman, a taxi driver in the capital, Jakarta, who goes by only one name. ``This is going to place a heavy burden on all of us. But what choice do we have? This government is deaf.''
This is the third time Yudhoyono has raised fuel prices since he was elected president in 2004. To cushion the blow, the government has provided direct cash payments to the poor - a policy it said Friday it would repeat.
Coordinating Minister for People's Welfare Aburizal Bakrie said the government would give US$10 (euro6.35) per month to the most needy for the next 1 1/2 years. It will also increase the amount of subsidized rice it allocates to the poor.
Indonesia is Southeast Asia's largest oil producer and a member of OPEC, but it has to import oil because of decades of declining investment in exploration and extraction.
President Susilo Bambang Yudhoyono warned earlier this month that budget-busting subsidies, which have for years enabled motorists to fill up for roughly US$1.80 (euro1.14) a gallon, would have to be drastically slashed.
Most people realize he had little choice, but that has not stopped thousands of students from taking to the streets in near-daily rallies this week, saying the poor would be hit the hardest.
Energy Minister Purnomo Yusgiantoro said Friday that gas prices were being boosted 33 per cent to US$2.40 (euro1.52) a gallon. Diesel oil jumped 27 per cent to US$2.25 (euro1.43) a gallon. And kerosene, used primarily for cooking, rose 25 per cent to US$1.00 (euro0.64).
``The rise in world oil prices and the rise in our fuel subsidies ... has burdened the state budget,'' Yusgiantoro told a news conference following a meeting with Yudhoyono. ``Therefore, we needed to adjust prices.''
Indonesia's 2008 budget was drafted using an average oil price of US$85 a barrel for the whole year - a figure later revised to US$95. When prices topped the US$100 mark, the cost of protecting consumers threatened to destabilize the already beleaguered economy.
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Subsidies put in place during the 32-year dictatorship of Suharto, who was ousted in 1998 amid massive protests, were aimed at protecting the country's most vulnerable.
The move is politically risky, coming ahead of general elections early next year.
Although it will help ease pressure on the budget, the hikes are also expected to push up the price of everything from rice to bus fares in the sprawling nation of 235 million people, half of whom live on less than US$2 a day.
``Of course, I'm against it,'' said Rahman, a taxi driver in the capital, Jakarta, who goes by only one name. ``This is going to place a heavy burden on all of us. But what choice do we have? This government is deaf.''
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This is the third time Yudhoyono has raised fuel prices since he was elected president in 2004. To cushion the blow, the government has provided direct cash payments to the poor - a policy it said Friday it would repeat.
Coordinating Minister for People's Welfare Aburizal Bakrie said the government would give US$10 (euro6.35) per month to the most needy for the next 1 1/2 years. It will also increase the amount of subsidized rice it allocates to the poor.
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Indonesia is Southeast Asia's largest oil producer and a member of OPEC, but it has to import oil because of decades of declining investment in exploration and extraction.
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