Indonesian Govt to Give Special Incentive for Coal Gasification

MINISTRY OF ENERGY AND MINERAL RESOURCES

PRESS RELEASE

NUMBER: 029.Pers/04/SJI/2021

Date: 19 January 2021

Indonesian Govt to Give Special Incentive for Coal Gasification

The Ministry of EMR will issue a policy on special royalty tariff of up to zero percent to accelerate coal downstreaming program, especially for the development of coal to DME, Minister of Energy and Mineral Resources (EMR) Arifin Tasrif has said in a work meeting with Commission VII of Indonesian House of Representatives (DPR RI) in Jakarta on Tuesday (19/1).

The policy will be set out in a ministerial regulation.

Arifin went on to say that the draft regulation is being discussed within the Ministry. The regulation will contain criteria and procedure for giving the incentive. The incentive will be offered special for downstream coal purpose and will not caused state revenue drops.

Additionally, the Indonesian Government will set special prices for gasification coal. The initiative will be included in draft Government Regulation on Implementation of Mineral and Coal Mining Business under a cost-plus-margin scheme.

The cost component consists of direct and indirect production costs, general expenses, and administration cost. Meanwhile, margin is 15 percent of cost. The formula is being calculated and will be issued as a ministerial regulation or decision.

"The term of a Mining Business License (IUP) for gasification projects is regulated in Law Number 3 of 2020," explained Arifin.

For the record, a coal-to-DME project is currently carried out by state coal company PT Bukit Asam in collaboration with state energy company PT Pertamina and American international corporation Air Product in Tanjung Enim, South Sumatra Province. The project is planned to become online by 2024 with a production target of 1.4 million tonnes of DME per year. (IY)

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