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Last Updated: Tuesday, 13 September 2005, 09:51 GMT 10:51 UK
Indonesia fuel payout for poorest
Residents in Jakarta queue up for kerosene at a distribution point
Millions of Indonesia's poorest use kerosene for cooking
Indonesia is to give cash to millions of its poorest people to help them cope with imminent fuel price rises.

Some 60 million Indonesians, living in 15.5 million households, will receive a 300,000 rupiah ($30; 16) subsidy over three months, the government said.

The payment comes as Indonesia prepares to cut fuel subsidies in response to the soaring cost of oil.

Ministers are keen to cushion the blow for the poor, after previous cuts helped topple the government in 1998.

"Before oil prices are raised, we want to make sure the most vulnerable groups in society will be protected," said Indonesia's information minister Sofyan Djalil.

He added that the government had not set a date for a fuel price increase, although previous comments from ministers suggested that rises could be in place by early October.

Politically sensitive

The first payment will likely go to the cities, towns on Java and Sumatra islands
Sofyan Djalil, Indonesia information minister

Fuel subsidies currently account for a quarter of Indonesia's budget, and many of the country's poorest people use kerosene for cooking.

However, the country has been forced to sell its rupiah currency to buy dollars in order to pay for increasingly expensive oil imports - raising fears that the budget deficit might spiral out of control.

Mr Djalil said the direct cash payments would be made through state postal company Pos Indonesia and state-owned bank Rakyat Indonesia.

"The first payment will likely go to the cities, towns on Java and Sumatra islands," he said. "Big cities are easier because the postal and banking systems are better. If this can be achieved by the end of the month, that will be great."

Many of the families targeted by the government's 300,000 rupiah payout scheme are estimated to have an income of less than 175,000 rupiah a month.

While Indonesians enjoy some of the cheapest fuel costs in Asia, tampering with the price is a politically sensitive move for any government.

Price hikes introduced by President Suharto in 1998, combined with soaring inflation and food shortages, eventually led to riots in the capital Jakarta and the toppling of his long-standing government.

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