Coal gasification project will help the Indonesian government reduce imports of Liquefied Petroleum Gas (LPG) by 1 million tons per year, thereby saving LPG import foreign exchange of 9.1 trillion rupiahs (some 580.7 million U.S. dollars) per year and increasing investment of 2.1 billion U.S. dollars.

Jakarta (Indonesia Window) – Coal gasification into the Dimethyl Ether (DME) project of Indonesia’s coal mining company Bukit Asam (PTBA) is targeted to reach the Commercial Operation Date (COD) in the fourth quarter of 2027.

The development of the project was conveyed by Minister of Energy and Mineral Resources Arifin Tasrif in a working meeting with the House of Representatives here on Monday (Nov. 21).

"PTBA will produce 1.4 million tons of DME per year with six million tons of coal as a raw material," the minister noted.

When the coal gasification project is completed, the Indonesian government can reduce imports of Liquefied Petroleum Gas (LPG) by one million tons per year. This effort is expected to save the LPG import foreign exchange of 9.1 trillion rupiahs (some 580.7 million U.S. dollars) per year, and to add investment of 2.1 billion U.S. dollars.

"In terms of employment absorption, the construction phase of the coal gasification project into DME will involve 10,600 workers, while the operation stage will employ 8,000 workers," Arifin said.

Meanwhile, he continued, the project gives advantage to PTBA as it uses low calorie coal GAR<4,000 calories which so far has a low selling value. On the other hand, Indonesia’s state-owned oil and gas company Pertamina, as a supplier of DME products, is expected to receive a margin from sales and become the sole distributor for DME sales.

In order to expedite the operation of this coal gasification facility, Arifin said that the development project requires regulatory support and incentives, including reducing coal royalty rates specifically for coal gasification to 0 percent.

"The Ministry of Finance has approved the principle permit, but it has not been followed up because they still have to wait for the revision of the Job Creation Law," he said.

In addition, special coal price regulations are also needed to increase added value for gasification purposes carried out at the mouth of the mine.

Another support required is the draft presidential regulation on the supply, distribution and pricing of DME as fuel, following the provisions of the oil and gas subsector.

PTBA's coal gasification project to become DME is listed as a National Strategic Project in Presidential Decree no. 109 of 2020 November 20, 2020. The groundbreaking by Indonesian President Joko Widodo took place on January 24 2022.

Reporting by Indonesia Window