Revision endorsed despite lawmakers’ spat over Sri Mulyani

Aditya Suharmoko and Hans David, The Jakarta Post, Jakarta | Tue, 05/04/2010 9:14 AM

The House of Representatives has endorsed the 2010 state budget revision with crucial adjustments to accelerate the economy, despite tensions raised by lawmakers opposing Finance Minister Sri Mulyani Indrawati.

In the budget revision, state expenditure has been increased to Rp 1,126.1 trillion (US$125 billion) from initially Rp 1,047.7 trillion, to accelerate infrastructure development and add energy subsidies in protecting the poor.

The Indonesian Democratic Party of Struggle (PDIP) and the People’s Conscience Party (Hanura) walked out of a plenary session on Monday after refusing to accept Mulyani’s presence in representing the government.

In March, the House voted 325-212 that all officials involved in the Rp 6.76 trillion Bank Century bailout should face due legal process. The bailout had been authorized in November 2008 by Mulyani and then Bank Indonesia governor Boediono, who has since been elected as Vice President.

House Deputy Speaker Anis Matta of the Prosperous Justice Party (PKS), who led the plenary session, had to adjourn the session for almost two hours for lobbying. Lawmakers finally agreed to proceed with the session.

The budget revision is needed to adjust to current global conditions, particularly the fluctuating oil prices and changes to the foreign exchange rate of the rupiah against the US dollar.

The benchmark Indonesian Crude Price (ICP) has been increased to $80 per barrel from $65, and the rupiah per dollar to 9,200 from 10,000.

Several priority infrastructure projects include the development of Kualanamu airport, post-quake rehabilitation and reconstruction in North Sumatra and West Java, said Mulyani who was accompanied by Coordinating Economic Minister Hatta Rajasa in drafting the budget revision since was rejected by lawmakers in the initial budget revision hearing.

Energy subsidies rose significantly from Rp 106.5 trillion to Rp 144 trillion, with the option given to the government to adjust subsidized fuel prices in case ICP rose 10 percent above the assumed price in one month.

“The government agrees with the House on the importance to adjust fuel prices,” Mulyani said.

Hatta said the government would adjust electricity rates by 10 percent on average in July, subject to the approval of House Commission VII overseeing energy affairs.

“We want [electricity rates] for under 450 watts to remain unadjusted,” he said.

Electricity subsidies increased slightly from Rp 54.5 trillion to Rp 55.1 trillion, less than the Rp 56.1 trillion proposed.

The government expects state power firm PT PLN to gain additional revenues of Rp 1 trillion from a new rates scheme for bigger power consumers.

At present, clients using 6,600 volt-amperes (VA) and above can buy electricity at subsidized rate only if their consumption does not exceed 50 percent of national consumption under that category. Surpassing this threshold means they must pay for their power usage at the market price.

J. Purwono, director general for electricity and energy utilization, said the government had mandated PLN to reduce the threshold to 30 percent. He added that this matter was subject to House approval.