Jakarta – The Indonesian government will pay out 495.8 billion rupiah (S$112 million) in subsidies for the poor and public transport operators to offset planned fuel price hikes.
A total of 164.8 billion rupiah had been earmarked for subsidies to the poor to buy kerosene, the deputy chairman of the National Development Planning Board, Muhammad Abduh, said.
Public transport operators, which in Indonesia are mostly private companies, will also receive a total of 331 billion rupiah in subsidies to buy diesel oil, the main fuel for their vehicles.
The subsidies have been agreed upon between the government and the legislature to prevent a rise in public transport costs. This would prompt a rise in other costs and the prices of goods.
The government and the legislature have mutually agreed to raise fuel prices by an average of 12 per cent from April 1. The price of kerosene will rise by 70 rupiah per litre to 350 rupiah per litre.
Poor families will receive a lump sum of 10,000 rupiah to buy 135 litres of kerosene for the rest of the year. This is based on the assumption that each family consumes 15 litres of kerosene, mostly for cooking purposes, per month. The subsidy was based on data from the social safety net programme which showed there were 17.4 million poor families.
The fuel subsidy to public transport operators was agreed upon after the government decided to increase the price of automotive diesel oil from 550 rupiah per litre to 600 rupiah per litre.
However, only three months of subsidies will be provided for each public transport operator. "After three months, we shall re- evaluate the data on the numbers of public tranpsortation vehicles in operation," Mr Abduh said.
According to him, the subsidies would be disbursed through the country's network of post offices. "Through the post offices, we expect to channel the subsidy funds to the remotest areas within two weeks," he added.
Mr Abduh said the government preferred using post offices rather than banks to distribute the fuel subsidies because the former had a wider network of operations.