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Private firms told to invest in coal gasification
The government has said it expects private companies to invest in facilities that can transform coal into gas and help the country reduce gas imports
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he government has said it expects private companies to invest in facilities that can transform coal into gas and help the country reduce gas imports.
Speaking during a hearing at the House of Representatives on Wednesday, Energy and Mineral Resources Minister Ignasius Jonan said once the plan was realized, it could reduce national gas imports to zero percent.
“Around half of our gas consumption is imported, which costs us around Rp 2 billion [US$144,600] a year. However, if we can transform coal into gas, it [gas imports] could go down to zero,” he said. “I believe that we should push coal miners to invest more in the plan.”
The ministry is ready to help any coal players who are interested in developing the industry by speeding up the issuance of permits, he said.
“When it comes to permits, [the companies] could even write them up themselves and let me do the signing.” Coal gasification transforms lignite coal into gas and other feedstocks that can serve as a competitive fuel source for the manufacturing industry.
Meanwhile, coal liquefaction turns the material into liquid hydrocarbon, which is the chief component of petroleum and petrochemicals.
Jonan, a former transportation minister, said private investors could have their own distribution channels, which means they do not have to use those set by state energy giant Pertamina.
“As long as they don’t ask for subsidies because the state budget only allocates subsidies for research and development.”
To prove the commercial feasibility of the plan, the ministry’s research and development center has been using gas from coal for cooking and small-capacity power plants (below 1 megawatt), among others.
“Coal gasification could save 40 to 50 percent of energy compared to petroleum-based fuel. It has also been used by small and medium businesses as it has low emissions,” the center stated.
A 2017 study called “Economic Analysis of Coal Gasification Plant for Electricity and Thermal Energy Supplies in Indonesia”, published in the Journal of Clean Energy Technologies, found that the selling price of electricity from coal gasification was “competitive compared to that of diesel oil [375 cents/kWh]”.
“[They are] much less competitive compared to the price of natural gas [864 cents/kWh]. The selling price of synthesis gas is also higher than that of LPG [238 cents/Normal Cubic Meters],” the article stated.
Jonan added that he hoped Pertamina could also intensify its investment in the coal gasification and liquefaction plan.
For coal gasification, Pertamina is currently in a consortium with state-owned coal miner PT Bukit Asam, state fertilizer holding firm PT Pupuk Indonesia and PT Chandra Asri Petrochemical, a chemical company owned by PT Barito Pacific and Siam Cement Group.
The consortium set up a project to transform gas into Dimethyl Ether (DME) with the capacity of 400,000 tons per year, as well as projects for fertilizer and petrochemical products. Ramson Siagian, a member of House Commission VII overseeing energy, however, said the plan should be entirely funded by the government as it aimed to ensure energy availability.
Jakarta-based mining research group ReforMiner Institute’s executive director Komaidi Notonegoro concurred, saying coal gasification and liquefaction would fare better in the hands of the government.
“The goal of advancing this technology is to [preserve the] environment rather than [achieve] efficiency, so it shouldn’t entirely be given to the private sector,” he said, adding that the plan would not likely be profitable for miners.
When asked about the plan, Indonesian Coal Companies Association (APBI) deputy executive director Hendra Sinadia said the technology was still considered expensive.
Miners would therefore require additional regulations and incentives to push the investment of downstream coal, including coal gasification and liquefaction.
“Investment in downstream coal is long-term, which means it also needs long-term assurance, such as a guarantee on a permit extension,” he said, adding that fiscal incentives were also crucial.
