Robert Go, Jakarta – Indonesia's government reached a preliminary agreement with bus operators on fare increases and additional government subsidies – averting a possible shut down of the capital's transportation system at the eleventh hour.

The actual quantum of the fare increase will be decided by the end of the week. Fourteen privately-owned firms, operating over 6,000 of Jakarta's public-transport vehicles and united under an umbrella association called Organda, threatened to stop services yesterday should the government keep a freeze on ticket prices which date back to before the economic crisis hit three years ago.

Organda representative Aip Sjarifuddin confirmed that a late Sunday meeting with city officials led to his organisation's consent to run at least partial service for the day.

Mr Aip also explained that city security officers had also warned of possible rioting by the public and further disruption of the city's already fragile economy and social stability should Organda members press ahead with their strike plan.

After a morning meeting yesterday with Organda representatives, Jakarta Governor Sutiyoso said: "I urge the public to understand that a tariff increase is unavoidable and will be effective as soon as the exact figures are negotiated. "Organda has agreed to resume normal operations in the meantime, but with a guarantee that there will be a tariff increase."

The government, aiming to keep consumer costs down, has been supporting public transportation in Jakarta for the last few years. The list of subsidised costs includes terminal, vehicle registration and travel permit fees. But Governor Sutiyoso stressed that fare increases will not be as high as the 100 per cent to 300 per cent range proposed by Organda.

He also referred specifically to one Organda complaint – that inflated spare parts costs have forced mechanics to cannibalise almost 40 per cent of their fleet for components to be used on roadworthy vehicles. On this point, he conceded that the government would consider exemption of importation taxes on four categories of spare parts including engine oil, brake pads, tyres and transmission components.

But in indicating that his negotiators would play hardball on the issues, he pointed out that the government is losing millions of rupiah a year paying the existing levels of subsidies.