Indonesia says cannot rule out more fuel price hikes
NUSA DUA, Indonesia (Reuters) - Indonesia cannot rule outfurther hikes in fuel prices ahead of the 2009 presidentialelections, Energy Minister Purnomo Yusgiantoro said on Sunday,due to the impact of fuel subsidies on the budget.
The government raised fuel prices by almost 30 percent lastmonth, sparking protests in a country where millions arealready suffering from rising energy and food costs.
While Indonesia still has some of the lowest fuel prices inAsia, the issue of fuel subsidies is politically sensitivegiven Indonesia is due to hold parliamentary and presidentialelections next year.
"The increase is about fairness. Subsidised fuels have beenenjoyed by the haves," rather than the have-nots, Yusgiantorosaid on the sidelines of the Coaltrans Asia Conference on theresort island of Bali.
Asked whether the government could guarantee there would beno more increases in fuel prices before the next presidentialelection due by mid-2009, Yusgiantoro said that was notpossible.
"We cannot guarantee, we never know what happens in thefuture," he said, adding that between 1965 and 2000, Indonesiahad increased fuel prices on 30 separate occasions.
When the government more than doubled fuel prices inOctober 2005, consumption fell significantly.
NET IMPORTER
Yusgiantoro also said that Indonesia, which has decided toleave the Organisation of Petroleum Exporting Countries (OPEC),may rejoin once it had lifted production and controlledconsumption. But he did not give a timeframe or furtherdetails.
Indonesia's crude oil output has fallen in recent years dueto ageing wells, a lack of investment and the absence of anymajor oil finds.
Its status as a net importer means it would benefit fromlower oil prices, putting it at odds with other OPEC members,who favour higher prices.
Asia's only member of the oil cartel sees daily oil outputof 927,000 barrels per day this year, down from 950,000 bpd in2007.
Separately, Simon Sembiring, director general of mineral,coal and geothermal at the ministry, said Indonesia'slong-awaited mining law could be passed before theparliamentary recess in July.
"The law must be passed, we will finish before theparliamentary recess period in July," Sembiring said, speakingon the sidelines of the conference.
Sembiring added an arbitration hearing over the sale ofstakes in a copper and gold mine operated by U.S. mining firmNewmont on Sumbawa island would start in Jakarta in December.
Indonesia is home to huge mineral deposits and is a keyproducer of commodities such as coal, tin, rubber, palm oil andnatural gas. However, uncertainty over the new mining law hasheld up investment in the sector.
(Editing by Sara Webb and David Holmes)