*Monday September 5, 7:22 PM* Indonesia may raise domestic oil prices 30-40 pct
(Adds mines and energy minister and market comments, background) By Muklis Ali JAKARTA, Sept 5 (Reuters) - Indonesia, suffering the effects of subsidising energy at a time of soaring global oil prices, may increase domestic oil product costs by between 30 and 40 percent on average, a mines and energy ministry official said on Monday. President Susilo Bambang Yudhoyono said last week the government would raise fuel prices to support the weakening rupiah and cut subsidy costs, but gave no details on the size and whether the increases would come at once or be phased in. "We have a draft on fuel increases. The increase is possibly between 30-40 percent on average for gasoline, kerosene and diesel for transport," the official, who declined to be identified, told Reuters. Asked about the proposed timing of the increases, the official said that would depend on the government. "The government wanted to make sure that there is a plan about compensation for the poor before the price goes up," he said. On timing, the government has said publicly that any increases would not come until after completion of a plan this month or next to cushion the effect on the poor. Indonesia has to balance between investors' demands for an even higher price rise to cover its monthly oil product import bill of $800-$900 million paid in U.S. dollars, and its social responsibility in a country where the poverty rate is 16 percent. Hundreds of bus drivers, vendors and factory workers staged a protest in Jakarta on Sunday against the plan to raise fuel prices, echoing past demonstrations against governments including that of former president Suharto who was forced to step down in 1998 when chaos engulfed the country. Coordinating Minister for Social Affairs Alwi Shihab told reporters on Monday that under a previous scheme total compensation for the poor was 13.5trillion ($1.3 billion) for a 29 percent oil products price increase in March. That compensation was targeted for about 36 million people across the country of 220 million. PHASED INCREASES Mines and Energy Minister Purnomo Yusgiantoro told a parliamentary commission earlier in the day his ministry had several scenarios for domestic oil product price increases. "We have a scenario to increase gradually from time to time toward (the international) market price or (of) automatic price adjustment toward market price," Purnomo said. "Under the scenarios also prices of certain types of oil products (could) be increased directly to market level. But we have an economic, social and political consideration." He said international market prices in August for gasoline of the type Indonesia subsidises were 5,700 rupiah ($0.55) a litre. Indonesia sells its regular gasoline for 2,400 rupiah a litre, and kerosene and diesel are also sold at large market discounts. One industry source said it would be impossible for the government to raise domestic oil products prices to international levels at one blow. "There will be political and social impacts if the government raises oil products price directly to the international market level. It is impossible," the source said. Asked about the 30-40 percent figure for the hikes, a Jakarta currency trader who declined to be identified said: "The market is expecting that the increase could be more. "The government has some hesitations in raising prices but the market wants an end to fuel subsidies." Irene Cheung, head of Asian currency strategy at ABN AMRO in Singapore, said: "This would be a very sharp increase given that we had a 29 percent rise earlier this year. "To be realistic, there is room for a sharp rise in prices on gasoline but it will be much harder to raise prices on kerosene." Pertamina marketing director Ari Soemarno said on Monday Indonesia would consume 65.6 million kilolitre (412 million barrels) of oil products in 2005 and 66.2 million kl in 2006. Indonesia, Asia-Pacific's sole OPEC member, imports about 30 percent of oil products and the rest come from domestic output. ($1 = 10,300 rupiah) (1 kilolitre = 6.28 barrels) (Additional reporting by Dhara Ranasinghe in Singapore) ------------------------------ Copyright (c) 2005Reuters Limited. All rights reserved. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of Reuters Limited Copyright (c) 2005 Yahoo! Pte Ltd. All Rights Reserved. [Non-text portions of this message have been removed] ------------------------ Yahoo! Groups Sponsor --------------------~--> Most low income households are not online. Help bridge the digital divide today! http://us.click.yahoo.com/cd_AJB/QnQLAA/TtwFAA/0XFolB/TM --------------------------------------------------------------------~-> Yahoo! Groups Links <*> To visit your group on the web, go to: http://groups.yahoo.com/group/Indo-Linux/ <*> To unsubscribe from this group, send an email to: [EMAIL PROTECTED] <*> Your use of Yahoo! Groups is subject to: http://docs.yahoo.com/info/terms/
