Government to limit transport fares hike to 15%

Aditya Suharmoko , The Jakarta Post , Jakarta | Fri, 05/23/2008 10:53 AM | Business

The government may cap rises in land transportation fares for public buses and minivans at 15 percent, when the planned domestic fuel price increases take effect, a minister says.

With fuel prices set to rise by an average of 28.7 percent, "the tolerance (for public bus and minivan fares) is 15 percent," Transportation Minister Jusman Syafii Djamal said Thursday.

The government plans to raise the per-liter price of Premium gasoline from Rp 4,500 (48.4 US cents) to Rp 6,000, and diesel from Rp 4,300 to Rp 5,500.

Public buses typically consume diesel, while public minivans run on Premium gasoline.

Jusman said economy-class train fares, the lowest class in rail travel, would not increase as the government had provided an additional Rp 150 billion in public service obligations (PSO) to compensate for the higher fuel prices.

He said the government had initially provided Rp 540 billion in PSOs to support the economy-class train system, which operates at a loss.

The fare subsidy is covered by state railway company PT Kereta Api Indonesia (KAI).

Business and executive-class train fares, he said, would likely increase, although he declined to give figures.

As of next January, the government will begin distributing smart cards to public bus and minivan operators, allowing them to purchase fuel at subsidized prices.

The smart card program will begin on Java and Bali, which account for 70 percent of the country's total fuel consumption.

TR Panjaitan, secretary of the Jakarta chapter of the Land Transportation Organization (Organda), said current fares could be maintained as long as incentives were given.

He cited the elimination of vehicle excise duty for public transportation as a possible incentive.

"About 60 percent of Indonesians are using public buses and minivans as their main transportation. The raise in public transport fares will burden them," he said.

Public bus and minivan fares in Jakarta vary from Rp 2,000 to Rp 5,000.

In the absence of incentives, Organda has calculated a 30 percent fuel price increase would demand a 20 percent rise in fares.

Taxi companies are also considering raising fares to cope with the fuel price increases.

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