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July 1, 2008

Indonesian govt wary of more fuel price hikes
The Indonesian government is wary of raising fuel oil prices again ahead of elections next April, the energy minister said Monday as President Susilo Bambang Yudhoyono's poll ratings slumped.

"The political risk of raising oil product prices is high, especially ahead of elections," Energy and Mineral Resources Minister Purnomo Yusgiantoro was quoted as saying by Dow Jones Newswires.

His comments came hours before state oil and gas company Pertamina announced the price of liquefied petroleum gas (LPG) used for household cooking would rise by 23 percent from Tuesday.

The LPG price will climb to 5,250 rupiah (half a dollar) a kilogramme from 4,250, the company said in a statement Monday.

"The LPG price in the international market has risen significantly," the company said, noting the market price was around 10,140 rupiah a kilogramme.

Yusgiantoro said the government would "shoulder" higher global oil prices in the state budget, which is creaking under the weight of massive fuel subsidies despite domestic price rises of almost 30 percent last month.

Analysts said the price hike was not enough, especially as global oil prices have continued to climb to new highs in June.

The fuel price rise has sparked violent protests, especially in Jakarta, which prompted parliament last week to launch a review of the policy.

An opinion poll released Sunday indicated for the first time that the rise had also damaged Yudhoyono's poll standings ahead of general elections next
April and the presidential elections in June.

The survey by Indo Barometer, which was published in The Jakarta Post, showed that Democratic Party of Struggle leader and ex-president Megawati Sukarnoputri would defeat Yudhoyono if polls were held today.

The ex-general would win only 20.7 percent of the vote compared to 30.4 percent for Megawati, it said. A survey in December showed Yudhoyono winning 38.1 percent of the vote, well ahead of Megawati on 27.4 percent.

"Yudhoyono's decision to increase fuel prices and his administration's failure to get people to accept the decision are factors behind his plunging popularity," Indo Barometer executive director M. Qodari was quoted as saying.


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