Indonesians step up fuel protests

The fuel hikes will have a big impact on everyday life

Thousands of people have taken to the streets across Indonesia to protest against looming fuel price hikes.

Demonstrators marched to Jakarta's presidential palace, and protests were held in at least seven other cities.

The rallies were mostly peaceful, although there were scattered reports of violence.

Petrol and kerosene prices are set to rise steeply from midnight on Friday as the government cuts generous fuel subsidies to balance its budget.

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 at least 60% Oil price hikes contributed to fall of President Suharto in '98 In pictures: Fuel protests Press dismay at hike

Tens of thousands of people across the country are reported to be queuing at petrol pumps ahead of the price hike. In outlying areas of the country, queues are stretching for up to 1km, El Shinta radio said.

Thousands of extra police have been mobilised in Jakarta in order to deal with the protests.

In Makassar, south Sulawesi, students pelted police with stones after attempting to approach Vice President Yusuf Kalla's private residence.

Up to 2,000 people reportedly marched towards the presidential palace in Jakarta. They chanted: "Fight it now! Fight the hikes!", "People have been fooled by SBY [President Susilo Bambang Yudhoyono] for too long!"

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.

President 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.

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.