Investment of up to Rp 3 trillion, the Coal Gasification Project Needs Incentives

Investment of up to Rp 3 trillion, the Coal Gasification Project Needs Incentives

THE CONVERSION of coal into syngas which is the raw material for further processing into dimethyl ether (DME) as fuel, urea as fertilizer, and polypropylene as plastic raw material, is considered necessary to get fiscal and non-fiscal incentives support. In this case, coal will be converted through gasification technology to the final product which has a higher selling value.

"Until now it is still felt not economical. Therefore, it needs fiscal incentives and support, both from the licensing side in order to attract investment," said Hendra Sinadia, Executive Director of the Indonesian Coal Mining Association (APBI), to Dunia Energi on Tuesday (12/2).

PT Bukit Asam Tbk (PTBA) has signed a Downstream Head of Agreement (HoA) with PT Pertamina (Persero), PT Pupuk Indonesia (Persero), and PT Chandra Asri Petrochemical Tbk, late last year. The signing will be followed up with the construction of a coal gasification processing plant which is planned to start operating in November 2022.

Later, the coal gasification processing plant will be built at Bukit Asam Coal Based Industrial Estate (BACBIE) located at the mouth of the Tanjung Enim coal mine, South Sumatra. BACBIE will be in the same location as the Sumsel 8 Mouth Power Plant.

It is expected that production can meet the market needs of 500 thousand tons of urea per year, 400 thousand tons of DME per year and 450 thousand tons of polypropylene per year.

With the target of meeting such a large demand, it is estimated that coal needs as a raw material for nine million tons per year, including to support the coal needs for its electricity generation.

Abadi Purnomo, Member of the National Energy Council (DEN), said that if the coal downstream project goes according to plan, it is expected to reduce the import of liquified natural gas (LPG). Through gasification technology coal is processed into syngas and then processed into DME. This DME will be used instead of LPG.

"We import 80% of LPG. There are two choices, replaced with DME, the mix together should not be replaced in total, mixed around 20-25%. Then second, for those in the household or apartment it should use an electric stove. With electric stoves, the electricity is absorbed and the LPG decreases," Abadi said to Dunia Energi, recently.

He added, currently the coal gasification project does not yet meet the economy. Therefore, fiscal and non-fiscal incentives are needed to attract investors.

"To build the factory it takes two years, the investment is quite large, around Rp 3 trillion. The rules do not yet exist, we will take them to a plenary session with the government so that there are fiscal and non-fiscal policies," said Abadi. (RA)

Source: Dunia Energi