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Last Updated: Wednesday, 28 September 2005, 07:44 GMT 08:44 UK
Indonesia braces for fuel protest
Students protest against fuel price rise, Jakarta - 27/9/05
Protests so far have been peaceful
Indonesia is to mobilise thousands of extra police in the capital Jakarta and other cities to guard against expected protests at fuel price increases.

Petrol and kerosene prices are set to rise sharply on Saturday as the government cuts subsidies to try and tackle a budget crisis.

Student groups and unions, who have already staged small protests, vowed bigger events ahead of the increase.

Jakarta's police chief said an extra 5,500 officers would be deployed.

FUEL RISES
1 litre unleaded petrol costs 2450 Rupiah (24 US cents), kerosene 1000 Rp (10 cents)
Government spending 20% of budget on fuel subsidies, due to weak Rp and high global prices
Prices set to rise by about 50%
Oil price hikes contributed to fall of President Suharto in '98

"We predict there will probably be the commandeering of petrol trucks and petrol stations... or vandalism or other anarchic behaviour," Firman Gani told reporters.

He said that the presidential palace and parliament were expected to be targeted.

There were reports on Wednesday of long queues forming at some petrol stations, and of others running out of fuel as consumers stocked up ahead of the price increases.

Budget crisis

Indonesia has some of the most generous fuel subsidies in Asia, a throwback to its days as a net oil exporter.

But it now has to import oil, and the sharp rise in oil prices has threatened to overwhelm the government's budget. Worries about the budget position triggered a sharp drop in the Indonesian currency, the rupiah, last month.

Indonesian President Susilo Bambang Yudhoyono announced the price rises last week, and parliament approved the plan on Tuesday by voting to cap government spending on fuel subsidies at $8.7bn.

Some economists estimate the effect of the cap will be to force some fuel prices up by 60%.

The government hopes to defuse some of the protests by making direct payments to 15 million poorer families, who will be hit by the rise in kerosene prices, since the fuel is widely used for cooking. Ministers argue that petrol price rises will be less painful, since they will mainly affect richer Indonesians who drive cars.

Small protests were held in Jakarta on Wednesday, following similar demonstrations in the South Sulawesi capital of Makassar on Tuesday.

The price rises come at a sensitive time, ahead of the Muslim fasting month of Ramadan.

Successive Indonesian governments have also been wary of cutting fuel subsidies, because a 1998 hike in fuel prices helped topple former dictator Suharto.


SEE ALSO:
Indonesia set for fuel cost rise
23 Sep 05 |  Business
Indonesia fuel payout for poorest
13 Sep 05 |  Business
Rupiah fall sparks new rate rise
06 Sep 05 |  Business
Indonesia plans to slash fuel aid
31 Aug 05 |  Business
Country profile: Indonesia
15 Sep 05 |  Country profiles


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