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Tuesday, April 5, 2011

Ex-vp proposes subsidized fuel price hike

Depok, W Java (ANTARA News) - Former vice president Jusuf Kalla has suggested that the government raise the prices of subsidized fuels rather than limiting their use.

"The limitation of subsidized fuel consumption will not be effective. Instead, it will lead to widespread irregularities," he said after attending a seminar on taking a lesson from the government`s kerosene-to-gas conversion program at the school of economics at University of Indonesia on Tuesday.

When the global crude price hit US$120 a barrel, the price of subsidized gasoline must be Rp6,000 a liter, he said. "I fear if the fuel oil prices are not raised they will pose a problem to the state finance," he said.

However, if the government pushed through the plan to limit the use of subsidized gasoline it would lead to irregularities and mutual suspicion and cause problems to gas stations, he said.

"The problem will become increasingly complicated. There is no other solution but to raise the prices of fuel oils," he said.

Therefore, he expressed hope that the government would drop the unpopular plan.

Sharing Kalla`s view, dean of the UI school of economics Firmanzah said raising the prices of fuel oils was the proper solution to problems related to fuel oils.

"The allotment of fuel oils will no doubt cause complex problems," he said.

Earlier, on Monday, the Indonesian Indigenous Businessmen Association (HIPPI) proposed that the government raise the prices of subsidized fuels instead of limiting their use.

The limitation of subsidized fuel consumption would weaken the regional economy which is dominated by indigenous entrepreneurs, HIPPI Secretary General Herman Heru Suprobo said in a press statement.

The move would definitely have an impact on the supply of basic necessaries to the public, he said.

"Therefore, the solution to the problem is raising the prices of subsidized fuels by 11 percent or Rp500 a liter according to the results of a study conducted by the team in charge of assessing the limitation of subsidized fuels," he said.

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