By Pandu Setiabudi
Eddy Soeparno, a member of Commission XII of the House of Representatives, expressed his concern over planned coal downstreaming projects, particularly coal-to-DME (dimethyl ether) conversion, which he warned could increase the state's subsidy burden. He conveyed this during a hearing between Commission XII and state mining holding company MIND ID, along with its subsidiaries, including coal miner PT Bukit Asam (PTBA), on Wednesday, July 16.
“The key aspect that we must always uphold is cost and economic viability. We must not force downstreaming efforts that turn out to be economically unfeasible,” said Eddy.
So far, the coal-to-DME downstreaming project, which is expected to reduce LPG imports, has seen limited investor interest, mainly because its economic feasibility remains questionable.
“A few years ago, we visited Air Products (and Chemicals Inc.) and held extensive discussions, but in the end, Air Products withdrew (from the proposed coal-to-DME project). Likewise, other investors partnering with coal companies besides PTBA also pulled out due to the project’s lack of economic viability,” Eddy added.
Air Products is a US-based technology company that initially planned to develop a coal-to-DME project with PTBA in South Sumatra, but later decided to withdraw from the high-profile project. Minister of Energy and Mineral Resources Bahlil Lahadalia has instructed PTBA to continue with the project to help reduce the country’s huge LPG imports. DME is a cleaner fuel alternative to liquefied petroleum gas.
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The government has also demanded that other major coal miners develop coal downstream projects.
This economic unfeasibility poses a risk of increasing the subsidy burden on the state, which contradicts the broader goal of downstreaming, to boost state revenue and support the government’s target of achieving 8% economic growth. Eddy suggested it would be better to focus on increasing domestic LPG production if the main objective is to reduce import dependency.
In the same hearing, PTBA President Director Arsal Ismail presented several of the company’s coal downstreaming initiatives, including coal-to-DME projects. According to him, the economic viability of the coal-to-DME project is still under assessment. “We are still making continuous efforts with our partners to explore its economic feasibility,” said Arsal.
Currently, the project has attracted only one potential investor,
China’s East China Engineering Science & Technology Co., Ltd. (ECEC), while PTBA is still seeking partnerships with various candidates, most of whom have shown interest only as EPC contractors, not as investors.
In addition to DME, PTBA is also pursuing other coal downstreaming projects, including the production of synthetic natural gas (SNG), methanol, ammonia, briquettes, semi-coke, artificial graphite, anode sheets, and humic acid.
Editing by Reiner Simanjuntak
