DME Project Reduces Imports and Creates Jobs, Says Indonesian President

MINISTRY OF ENERGY AND MINERAL RESOURCES

THE REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 37.Pers/04/SJI/2022

Date: 24 January 2022

DME Project Reduces Imports and Creates Jobs, Says Indonesian President

The President of the Republic of Indonesia, Joko "Jokowi" Widodo, on Monday (24/1) officiated at the groundbreaking of a coal downstream processing into Dimethyl Ether (DME) project in Tanjung Enim, South Sumatra. Minister of Energy and Mineral Resources (EMR) Arifin Tasrif accompanied the President at the ceremony.

"I made the order six years ago. Alhamdulillah, today we can start the groundbreaking of the downstream coal processing into DME project," said Jokowi in his opening remarks.

The sheer amount of Liquefied Natural Gas (LPG) imports, said Jokowi, has become a special concern of the government and a matter for consideration leading to the birth of the DME project. "The value of our LPG imports is huge, maybe around Rp80 trillion out of Rp100 trillion demands per year. We also have to provide subsidy so that the public can use the LPG because the price is too high. The subsidy is around Rp60-Rp70 trillion," Jokowi explained.

Jokowi said that raw materials were available but minimally utilized prior to the DME project. "We have the raw materials, but other countries that create job opportunities. If this project has started production, it will reduce the subsidy that comes from the State Budget by about Rp7 trillion. If the use of LPG can be stopped and everyone turns to DME, we can improve our trade balance and our current account balance," added Jokowi.

The Tanjung Enim DME project can curb up to 1 million tonnes of LPG imports per year with its production of 1.4 million tonnes of DME per year. Additionally, the DME project can create jobs for 10,600 people in the construction phase and 8,000 people in the operation phase, adding up to USD2.1 billion of foreign investment (the initial 100% investment by Air Product), and saving the foreign exchange reserves of up to Rp9.14 trillion per year at an average LPG price of USD637.3 per MT (on the basis of the average LPG market index price in 2021).

"If there are five investments like the one in front of us, as many as 70,000 jobs will be created, and that's only from the direct investment. Indirect investments can usually create two or three times as much," Jokowi emphasized.

The use of DME as fuel has several advantages. For example, DME easily decomposes in the air so it does not damage the ozone layer. Next, DME produces a more stable flame, and thus, burns faster than LPG. On the contrary, it does not produce particulate matter (PM) and nitrogen oxides (NOx) pollutants, nor does it contain sulfur, so it is more environmentally friendly.

The President ordered all relevant ministries and agencies to ensure the DME project finishes in 30 months and becomes a pilot project for other locations with abundant coal deposits. "Do not fall short of the target. We hope that after this project completes, we can start again somewhere else because this project can only supply South Sumatra and its surrounding areas, for approximately six million families. We have abundant coal deposits. It's far too small if these are just used for DME production," Jokowi continued.

Besides the Minister of EMR, other cabinet members were also present at the ceremony, including Minister of State-Owned Enterprises Erick Thohir, Minister of Investment/Head of Investment Coordinating Agency Bahlil Lahadalia, and Cabinet Secretary Pramono Anung.

For the record, downstream coal processing into DME is one of the National Strategic Projects set out in Presidential Regulation No. 109 of 2020. The Tanjung Enim project has been developed by state miner PT Bukit Batubara, state energy company PT Pertamina, and US investor Air Product. The project will have a production capacity of 1.4 million tonnes per year. The project agreement was signed on December 10, 2020, the Cooperation Agreement (CA) on February 11, 2021, and finally the Cooperation Agreement Amendment (CAA) and Conditional Processing Service Agreement (PSA) was signed on May 10, 2021 in Los Angeles, USA. (IY)

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

Agung Pribadi (08112213555)

Share This!