DME is Economically Viable for Indonesia

MINISTRY OF ENERGY AND MINERAL RESOURCES

REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 390.Pers/04/SJI/2020

Date: 7 December 2020

DME is Economically Viable for Indonesia

The Dimethyl Ether (DME) project is economically viable, acting Head of Research and Development Agency of Energy and Mineral Resources (Balitbang ESDM) Dadan Kusdiana has said, quoting a report by the Coal Downstream Study Team of the Agency.

"There are at least 6 economic impacts of downstream coal processing with a production capacity of about 1.4 million tonnes of DME. The public may not know much about these benefits," said Dadan in Jakarta on Sunday (6/12).

First, DME improves national energy security and reduces dependency on LPG imports. The use of DME will curb the import of up to 1 million tonnes of LPG per year if DME is produced by 1.4 million tonnes per year.

Second, the use of DME saves foreign exchange reserves of up to Rp 9.7 trillion annually and trade balance up to Rp 5.5 trillion per year.

Third, a DME project attracts foreign investment of USD2.1 billion (about Rp 30 trillion).

Fourth, a DME plant will use 180 million tonnes of low-calorie coal for the next 30 year of the plant's life.

Fifth, the government will receive a direct benefit in the form of multiplier effect of up to Rp 800 million per year.

Sixth, a DME project will empower the national industry by absorbing about 10,570 workers during construction stage and 7,976 workers at operation stage.

These impacts have rejected the study by an energy think tank that states the annual loss from Indonesia's DME project reaches USD377 million. The team analyzed the think tank's report against the Feasibility Study (FS) of PT Bukit Asam (PTBA). The latter has reported that a DME project will generate Net Present Value (NPV) of USD350 million and Internal Rate of Return (IRR) of about 11%. Thus, the project is economic and does not make a loss.

DME is a downstream product of coal. It results from gasification of low-calorie coal, and it can substitute LPG that is widely used in Indonesia for cooking. State-owned coal miner PT Bukit Asam is the executor of a US$2 billion gasification project. (IY)

Head of Bureau of Communication, Public Information Services, and Cooperation

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