Indonesia hikes fuel prices 30 per cent, gives subsidies to poor

Jakarta - FuelPetrol prices in Indonesia rose by almost 30 per cent on Saturday under a government plan to safeguard the state budget.

Officials also began offering fuel subsidies to the poor to help offset the price hike.

"Considering the rising global fuel price and the heavy burden of subsidies on the budget, we have decided to raise the fuel price," energy minister Purnomo Yusgiantoro said in Jakarta on Friday.

The new price was effective on Saturday and long queues formed at gas stations ahead of the announcement late Friday as millions of Indonesians tried to fill up their gas tanks with old price before midnight.

Sporadic protests swept through more than a dozen cities in the past week, opposing the government's plan to cut subsidies and raise domestic fuel prices.

The Indonesian government on Saturday began paying the equivalent of 1.55 billion dollars cash in fuel subsidies to about 19.1 million impoverished families to help them cope with the impact of fuel price hikes.

Millions of poor Indonesians were to receive direct cash payments distributed through local post offices in major cities in the vast archipelago country, where more than 225 million people live on less than 2 dollars a day and are already suffering from the impact of high food prices.

"I will go to the market and get some rice with the money I just got," Mbah Walijan from Yogyakarta province in central Java was quoted as saying by Detik. Com online news agency after receiving 300 thousands rupiah (33 dollars) for the first three months of the subsidy programme.

The first phase of direct cash subsidies will cover a period of seven months through December, while the second phase of the programme will last through December 2009.

The government's plan to raise the fuel prices also sparked mounting opposition from lawmakers. Most parties were against the move ahead of elections slated for next year.

Fuel price hikes have been a sensitive issue in Indonesia, the world's fourth most populous nation, since riots over a price hike in 1998 hastened the downfall of late president Suharto's dictatorship.

Indonesia is South-East Asia's only member of the Organization of the Petroleum Exporting Countries (OPEC), but the country has changed its status from an oil exporter to a net crude oil importer in recent years due to sharply declining output.

In 2005, Indonesia raised the fuel price by 126 per cent, sparking widespread street protests. (dpa)