Indonesia Experiences Coal Crisis, What's The Fate Of The Gasification Project?

JAKARTA - Special Staff to the Minister of SOEs, Arya Sinulingga, confirmed that the current shortage of coal and LNG does not affect the coal to DME gasification project. The project is currently still under discussion.

"The project is still in the discussion stage between the parties and the government," he said when contacted by VOI, Wednesday, January 5.

The development of the coal gasification project (coal to DME) between PT Pertamina (Persero), PT Bukit Asam Tbk, and Air Products & Chemical Inc. Occurred in the midst of the domestic coal and liquefied natural gas (LNG) crisis. The investment value of the project is estimated at USD 2.1 billion or equivalent to IDR 30.1 trillion.

Arya also explained that the coal that will be used in the gasification project is low-rank coal. He said the coal had not been used for the electricity industry.

According to Arya, the gasification project actually uses a type of coal that has not been widely used or converted into gas products. Later it can be used as fuel or raw material for the chemical industry.

"And the type of coal that will be used by the gasification project is low rank which has not been used for the electricity industry. So it doesn't affect the current situation," he said.

To accelerate coal gasification, the government through Pertamina, PTBA and the US company Air Products & Chemical Inc. signed a Processing Service Agreement in 2021.

The Ministry of SOEs noted that coal gasification also has direct added value for Indonesia's macroeconomy. This project can support the trade balance, reduce dependence on LPG imports, and save foreign exchange reserves. Savings in foreign exchange reserves are estimated at IDR 9.7 trillion.

The coal gasification project, which is being run by Bukit Asam, Pertamina, and Air Product, will ensure national energy security and will also become a driving force for the energy industry to operate optimally. In fact, the government is providing incentives to smooth the downstream coal project through a 0 percent royalty which is affirmed in the Job Creation Act or the Omnibus Law on Job Creation and its derivative regulations.

Not only that, but the government has also prepared a special price for coal for downstreaming and a subsidy scheme for Dimethyl Ether products which will be used to substitute LPG.