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Indonesia faces 30 percent fuel price hike

  • Story Highlights
  • Indonesian officials say fuel prices to rise 30 percent due to subsidy cut
  • Prospect of price hikes have already sparked protests in Asian nation
  • Officials say poor families will receive one-off payment to offset costs
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From CNN's Kathy Quiano
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JAKARTA, Indonesia (CNN) -- Rising oil prices are hitting home in Indonesia, one of the world's most populous nations.

Indonesian officials said the country is cutting subsidies that have helped consumers in the Asian nation offset fuel costs. The result will be an average increase in gasoline, kerosene and diesel prices of nearly 30 percent per liter.

Energy Minister Purnomo Yusgiantoro said at a news conference that if it did not take this action, Indonesia would be spending almost $14 billion this year for fuel subsidies. That would represent about 13 percent of its budget.

The specter of a decrease in fuel subsidies prompted protests across the country this week.

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The fuel price rise is expected to hit Indonesia's poor the most, as they struggle to afford rice and other staples. To help reduce that impact, the government said it will distribute 10,000 rupiah ($10) per month to 19 million low-income families.

Yusgiantoro said late Friday that the price of gasoline will jump 33 percent to 6,000 rupiah (63 U.S. cents) per liter. Diesel oil will increase 27 percent to 5,500 rupiah (58 cents), and kerosene will rise 25 percent to 2,500 rupiah (26 cents).

Indonesia is the only Southeast Asian nation in OPEC, the Organization of the Petroleum Exporting Countries, but the country has been a net oil importer since 2004, largely because of aging oil fields and declining investment in exploration.

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