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May 18, 2008

Govt limits fuel purchases ahead of price rise

Indonesia's state-owned oil and gas company Pertamina has set limits on subsidised fuel purchases ahead of the government's plans to hike fuel prices, AFP quoted local reports as saying Saturday.

In an announcement sent to petrol stations around the capital and several other cities, Pertamina has limited retail purchases of gasoline and diesel fuel to 75,000 rupiah (8 dollars) for private cars. Subsidised gasoline costs 4,500 rupiah per litre and diesel 4,300 rupiah.

Pertamina vice president Djaelani Sutomo told the Jakarta Post the move aimed to prevent hoarding ahead of the price hike.

"We are doing this to control consumption, which has jumped significantly since the government announced its plan to raise domestic fuel price," he said.

Indonesia announced its intention to raise fuel prices last week, with the rising global cost of oil forcing the country to spend increasing amounts on its multi-billion-dollar subsidy scheme.

The administration of President Susilo Bambang Yudhoyono says the move is essential to cut back the ballooning cost of the subsidies, which outstrips spending on social programmes and infrastructure.

The government is facing mounting opposition from the street as well as parliament, where most parties have reportedly turned against the plan in a bid to win favour with voters ahead of elections next year.

Indonesia last raised the fuel price by 126 percent in 2005, sparking widespread street protests.

On Friday, Indonesian House of Representatives had invited President Susilo Bambang Yudhoyono to a consultative meeting on the government's plan to raise fuel oil prices.

House Speaker Agung Laksono said the consultative meeting should be held as soon as possible, before the government actually decides to increase the fuel oil prices in late May.

The leaders of all the party factions in the House and the related House commissions would also be involved in the consultative meeting as it would be the only opportunity for them to discuss the matter with the president, Laksono said.

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