US-based Air Products & Chemicals Inc (APCI) has also decided to quit a planned coal to methanol project with East Kalimantan coal miner PT Kaltim Prima Coal (KPC).
This was said by Ad-Interim Director General of Mineral and Coal of the Ministry of Energy and Mineral Resources, Idris Sihite on Thursday. “Yes, (Air Products) has also pulled out (from the project with KPC),” he said in response to questions from journalists following the US firm’s decision to quit from a coal to dimethyl ether (DME) project with coal miner PT Bukit Asam Tbk (IDX: PTBA).
APCI initially planned to develop a coal to methanol project in Bengalon, East Kalimantan, in partnership with coal miners KPC and PT Ithaca Resources, with production capacity of 1.8 million tons of methanol per year and coal requirement of 6.5 million tons per year. The proposed project has received national strategic project status.
PTBA President Director Arsal Ismail said earlier that APCI has sent a letter to the Ministry of Investment that it has decided to withdraw from the coal to DME project in South Sumatra to be developed in partnership with PTBA and state-owned oil and gas firm PT Pertamina. Under the partnership, APCI will provide the required technology and financing, while PTBA will supply the required coal and Pertamina as the off-taker of the DME.
Read also : Air Products quits coal to DME project
The coal to DME project, which has been assigned a national strategic project, was designed to have a production capacity of 1.4 million tons of DME per year with annual coal requirement of around 6 million tons. DME can be used as a substitute for liquid petroleum gas (LPG), which would help the country reduce its huge LPG import and ease the current account deficit problem. President Joko Widodo led a ground-breaking ceremony of the estimated US$2.1 billion high profile coal to DME project in January of last year.
PTBA’s Arsal said that the company remains committed to continue the DME project despite the withdrawal of APCI.
Idris said that the decision by APCI to withdraw from the coal to DME project was probably because the partners have yet to agree on the business scheme and other economic aspects.
PTBA has previously called for government incentives including price subsidy for the coal feedstock to avoid losses for the company.
On Tuesday, Minister of Investment Bahlil Lahadali told reporters that a presidential decree on incentives for coal to DME project would be completed soon. He was speaking following a limited cabinet meeting discussing ways to accelerate coal gasification projects.
Elsewhere, Idris reiterated that as mandated by the mining law, coal miners, especially the PKP2B coal miners which have secured renewal of operating license, are obligated to develop coal downstream projects such as processing coal into DME or methanol.
Editing by Reiner Simanjuntak
