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Danantara to revive costly coal gasification, oil refinery projects
The government plans to kick off dozens of natural resource processing projects worth $40 billion this year, including coal gasification projects, though both local and international analysts have cautioned about the technology's costliness and unfavorable investment trends.
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Pertamina’s oil refinery in Balikpapan, East Kalimantan, is pictured on Jan. 8, 2022. (Pertamina/Pertamina)
T
he government seeks to revamp coal gasification projects and build what is to be the country’s largest oil refineries among the dozens of megaprojects worth a combined US$618 billion set to start this year, financed by the newly established Danantara sovereign wealth fund (SWF), a minister has said.
Home to the world’s seventh-largest coal reserves, Indonesia has long sought to process low-rank coal to produce dimethyl ether (DME) as a way to cut its reliance on liquefied petroleum gas (LPG) imports, but past efforts stalled when foreign investors pulled out.
“The government doesn’t need new investors. The President’s directive is clear: Use domestic funds,” Energy and Mineral Resources Minister Bahlil Lahadalia told reporters at the State Palace on Monday.
“All we need [from investors] is the technology. The capital will come from the government and local investors, while the raw material and offtakers are all ours. We’re no longer dependent on foreign players,” he said.
Read also: Coal gasification no easy feat, say industry players
Indonesia has been pushing to process low-quality coal into higher-value products, such as DME, methanol, urea and other compounds.
State-owned mining company PT Bukit Asam (PTBA) and United States-based Air Products and Chemicals planned a joint venture in 2018, but Air Products pulled out in 2023, when it also exited a similar project with PT Kaltim Prima Coal (KPC).
