"When we adjusted the price of fuel in 2005 and 2008, the people needed compensation."
Jakarta (ANTARA News) - President Susilo Bambang Yudhoyono held a closed-door meeting to discuss the results of a study on fuel subsidy reduction plan at the Presidential Office here on Thursday.

"We heard the president`s recent directives in Bali, now we will report the results of studies on that matter," Presidential Special Staff on Economic Affairs Firmanzah said here.

Firmanzah said that previous recommendations from the Ministry of Energy and Mineral Resources, the National Economic Committee and state-owned oil and gas company Pertamina had been further discussed at the office of the chief economic minister.

On the possibility of the government raising fuel oil prices, Firmanzah said final decision was still under discussion. He did not rule out the possibility for the government issuing a compensation program in connection with fuel subsidy reduction.

"When we adjusted the price of fuel in 2005 and 2008, the people needed compensation," he said.

He said that the government had already had pro-people programs such as rice for the poor program, people`s empowerment national program, scholarship for poor students and school operational assistance (BOS).

In connection with the possibility of turmoil, Firmanzah said that popularization and communications were main factors but the government was still considering aspects that needed to be taken into account.

President Yudhoyono has previously said that the government was still discussing policies it would take with regard to reducing fuel subsidy reduction.

According to the president, if the subsidized fuel oil prices were raised it would have impacts on high inflation and poverty rates.

The president said that the government had increased the prices of subsidized fuels in 2005 and in 2008. It caused prices of commodities and services to sky-rocketing but when the prices of fuel were lowered, the prices of commodities and services did not follow.

"So, the elasticity of the service and commodities` prices was very low," the president said.

According to the president when the prices of subsidized fuels are raised, they should be followed by compensation for poor people.

"For me, providing compensation for the poor when the prices of subsidized fuels are raised is a must," the president said.
(Uu.A014/O001)

Editor: Priyambodo RH
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