Hikes in fuel prices not ruled out

Indonesian minister says hikes in fuel prices not ruled out
Friday, July 29 2005, Harakahdaily

KUALA LUMPUR, July 29 - Indonesia's Minister for National Development Planning Sri Mulyani Indrawati said Thursday that a drive to reduce energy consumption had made some headway, but did not rule out another fuel price hike.

"So far electricity consumption has been quite drastically reduced, especially on the peak burden, so that's a good indication," she said on the sidelines of an Asia economic conference.

"We are not expecting that it is going to disrupt the economic pickup that we are now enjoying in the first two quarters," added the minister, who is also chair of the National Development Planning Agency.

Indonesian President Susilo Bambang Yudhoyono this month issued a decree ordering all officials and government institutions to reduce their fuel and electricity consumption.

He also said that the government was considering ways to enforce fuel saving measures, which may include higher taxes for larger-engine cars or switching off air conditioners at offices and shopping malls before closing hours.

The measures are aimed at reducing fuel consumption by 5-10 percent nationwide and to keep fuel subsidy spending within the targeted 76.5 trillion rupiah (7.84 billion dollars) this year.

Indrawati said the government was examining how the drive could be extended from saving energy to curbing fuel consumption, which she said was a difficult task.

"For the fuel, it's a really difficult one because the fact that Indonesia is selling more cars and motorcycles is also demanding a higher consumption of fuel," she told AFP.

The minister said that the government was not ruling out a hike in fuel prices to keep the situation under control.

"Any option is still open for all of us, so as a government we are still going to review and monitor what we can achieve and we will achieve with this saving energy movement by us," she said.

"We will see the sustainability of our own fiscal status as well in this case, the possibility of adjusting the price, first to the business community before we can move to the other consumers."

Indrawati said that despite pressure over oil prices, Indonesia expected to maintain its targetted growth of six percent this year, citing strong results in the first two quarters which were "way above our optimistic expectations."

"I think overall the six percent maximum growth for the year hopefully can be easily achieved," she said. - AFP/mks.