JAKARTA, Indonesia — In an effort to defuse nationwide protests, the Indonesian government on Monday agreed to sharply roll back a recent price increase for fuel.
Baihaqi Hakim, president of the state-owned Pertamina oil company, said the increases would be slashed Tuesday by as much as two-thirds depending on the type of fuel.
Responding to pressure to eliminate budget-draining subsidies, President Megawati Sukarnoputri at the beginning of January increased the prices of fuel by between 3 percent and 22 percent and electricity by 6 percent.
The move was greeted by an immediate wave of protests, some of which turned violent.
Although the price of most fuels will remain about 8 percent higher than before the hikes, Tuesday's move is seen as a major concession by the government, which last week postponed an increase in telephone rates.
Megawati faces re-election next year, and many analysts have predicted that the hikes could sharply reduce her support among the urban poor who formed her party's electoral base in the last election in 1999.
Nationwide protests against similar price rises in 1998 contributed to the downfall of ex-dictator Suharto.
Although the current protests have been much smaller than the ones five years ago — with only a few hundred participants on average — the resulting publicity contributed to a steady fall in Megawati's popularity.
Earlier Monday, Energy Minister Purnomo Yusgiantoro said the country would use profits from oil exports to fund the extra subsidies.