February 28, 2005
Reuters
JAKARTA (Reuters) - Angry students burned tyres and seized an oil truck in Jakarta on Monday in protests that hit four Indonesian cities over the government's planned hike in domestic fuel prices.
Despite the opposition, President Susilo Bambang Yudhoyono said Indonesia had to take the "bitter" step of raising fuel product prices to cut costly subsidies that burden the cash-strapped government.
However, speaking ahead of a possible implementation of the hikes later in the day, Yudhoyono sought to allay concerns among poor Indonesians, saying they would be properly compensated.
Several hundred students protested in Jakarta while smaller numbers demonstrated in three other cities across Java island in a sign of the political test facing Yudhoyono if he goes ahead with the plan.
Students in Jakarta burned tyres outside a university, witnesses said. They also stopped a fuel truck operated by state oil firm Pertamina, forcing it to enter the campus grounds.
Phased cuts of subsidies in the past have sparked violence from students and public transport drivers and forced previous presidents to roll back some of the price increases.
Indonesia is Asia's only member of the Organisation of the Petroleum Exporting Countries but became a net crude oil importer in certain months in 2004 due to production problems and low investment.
The government told parliament last week it wanted to raise fuel prices by an average of 29 percent to cut subsidies that allow Indonesians to buy some of the cheapest gasoline in Asia.
A Mines and Energy Ministry official said confirmation of the increases and when they would take effect could be announced later on Monday. He declined to give any details.
"According to the plan, today the government may announce the price increase in domestic oil products," the official, who declined to be identified, told Reuters.
Yudhoyono said the transition would not be easy.
"It will be an uneasy choice, a bitter choice," Yudhoyono said after meeting members of parliament.
"The government will make sure compensation for the poor people... will really go to them."
Yudhoyono gave no time for the announcement.
Some officials have said a fund would be created from part of the saved subsidies to help those worst hit by the rises.
Last year, the oil subsidy bill hit an estimated 59.2 trillion rupiah ($6.4 billion), from an initial budget plan of 14.5 trillion rupiah, as world oil prices soared.
Indonesia wants to slash the subsidy bill this year to 19 trillion rupiah, but has said that might be hard, again because of high international oil prices.
Under the fuel price hike plan put to parliament last week -- which has been disclosed by legislators -- gasoline prices would rise by 32.6 percent, auto diesel 27.3 percent and fuel oil by 47.4 percent. Household kerosene prices would not change.
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