Aditya Suharmoko and Abdul Khalik, Jakarta – After weeks of uncertainty, the government on Friday raised subsidized fuel prices by an average of 28.7 percent to help salvage the state budget, which has been severely strained by high-flying crude oil prices.
Energy and Mineral Resources Minister Purnomo Yusgiantoro told a press conference that per-liter Premium gasoline was being increased from Rp 4,500 (48 US cents) to Rp 6,000, diesel from Rp 4,300 to Rp 5,500 and kerosene from Rp 2,000 to Rp 2,500.
"The government needed to adjust the fuel prices considering the rise in global oil prices," said Purnomo, referring to oil prices that are currently hovering at $130 per barrel.
Also attending the briefing were Finance Minister Sri Mulyani Indrawati, Industry Minister Fahmi Idris, State Minister for National Development Planning Paskah Suzetta, Trade Minister Mari Elka Pangestu, Coordinating Minister for People's Welfare Aburizal Bakrie, Transportation Minister Jusman Syafii Djamal, Social Affairs Minister Bachtiar Chamsyah, Home Affairs Minister Mardiyanto and Communications and Information Minister Muhammad Nuh.
The last fuel price increases took place in October 2005.
To help mitigate the move's impact on the poor, the government is providing cash transfers of Rp 100,000 per month until the end of 2008 and 15 kilograms of cheap rice to poor households, Aburizal said. According to the Central Statistics Agency, the country has 19.1 million poor households nationwide.
The cash transfer aid can be obtained beginning May 24 from post offices, Bachtiar said. He said people were advised not be rushed in obtaining the money as "the money can be obtained until the end of the year".
Aburizal also said the government would provide a one-time payment of Rp 150,000 to low-ranking civil servants, honorary workers and military and police officers, to be disbursed in July. In addition, up to Rp 14 trillion has been allocated to help people in rural areas maintain their small businesses.
Earlier in the day, governors said they supported the fuel price increases and were ready to help monitor the distribution of the direct cash aid in their provinces. President Susilo Bambang Yudhoyono and the governors held a meeting before the fuel policy's announcement.
Under the cash program, each household has to secure a card to be eligible for the disbursement. "For Jakarta, we are ready to ensure that the cash program reaches the designated people safely," Jakarta Governor Fauzi Bowo said after the meeting.
BPS chairman Rusman Heriawan said the fuel price increases would add 0.5 percent to May inflation. "Calculating the low inflation in May 2007 and last month's year-on-year inflation of 8.96 percent, inflation in May will likely reach above 10 percent," said Rusman.