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Indonesia Panel Fails to Agree on Fuel Compensation Program

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June 16 (Bloomberg) -- Indonesia’s parliamentary budget commission failed to agree yesterday on whether to approve a government program to compensate poor people for higher fuel prices, undermining President Susilo Bambang Yudhoyono’s efforts to cut energy subsidies.

Three out of nine factions in the commission rejected either the compensation program or the government’s plan to increase subsidized fuel prices, Chairman Ahmadi Noor Supit said during the commission meeting that yesterday approved the revised 2013 state budget. The matter will be brought to the parliament’s plenary session on Monday, June 17, which will endorse the revised budget, Supit said.

The factions that only partially agreed to the revision were the Indonesian Democratic Party for Struggle, Prosperous Justice Party and the Gerindra faction, he said at the meeting with government officials including Finance Minister Chatib Basri in Jakarta.

Yudhoyono has put off raising fuel prices since protests derailed a planned increase last year in a country where riots spurred by soaring living costs helped oust dictator Suharto in 1998. Curbing energy subsidies, which cost the government 211.9 trillion rupiah ($21.5 billion) last year, will reduce the trade and current-account deficits that made the rupiah Asia’s worst performing currency after the Japanese yen over the past year.

The government has proposed increasing the cost of gasoline by 2,000 rupiah a liter and diesel by 1,000 rupiah, Basri said May 22. Indonesia, an energy producer, is a net importer of oil.

To contact the reporters on this story: Berni Moestafa in Jakarta at bmoestafa@bloomberg.net; Shamim Adam in Singapore at sadam2@bloomberg.net

To contact the editor responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net