Indonesia to keep fuel subsidies

Voter pressure due to next year's elections has led Indonesia's Energy and Mineral Resources Minister, Purnomo Yusgiantoro, to cancel the plans to eliminate subsidies on non-kerosene petroleum products and there would not be increasing fuel prices.
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While this pledge will go down well with the majority of Indonesians , the decision is not expected to please the country's international donors who have long called for increased petroleum retail prices to keep Indonesia in line with rising international crude prices.

This decision to raise spending on fuel subsidies was announced following a meeting between Yusgiantoro and representatives from the House of Representatives Budget Committee, the Finance Ministry, and Energy and Mineral Resources Ministry. This move contravenes a national law and still needs to be formally approved in a plenary session of parliament before it can happen.

Yusgiantoro openly admits "the election and other political activities would make it impossible to increase the cost of fuel next year" and the oil and gas director general, Iin Arifin Takhyan, has said the government would be allocating around US$1.73 billion for the subsidies.

Domestic fuel prices have long been a politically sensitive issue in Indonesia and have been the cause of many riots in the late 90s, including a recent anti-government rally earlier this year that forced the Indonesian government to backtrack on utility price increases.


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