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Coal gasification ‘no easy feat’, say industry players
Zero-percent coal royalty may not suffice to answer Indonesia coal downstream ambitions with said there were many unnoticed challenges that the government may need to take into account.
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Coal is moved from barges onto a truck at the Karya Citra Nusantara Port in North Jakarta on Jan. 13, 2022.
(Reuters/Willy Kurniawan)
I
ndonesia’s plans for downstreaming coal industries have a long way to go, and a recently introduced government incentive to accelerate development is deemed insufficient by industry players, particularly those engaged in coal gasification.
On Dec. 30, President Joko “Jokowi” Widodo signed Government Regulation in Lieu of Law (Perppu) No. 2/2022, which grants companies that hold mining licenses (IUPs) or special mining permits (IUPKs) the privilege of 0-percent coal royalties if they invest in downstream industries.
However, expecting a newly born industry currently dominated by capital-intensive coal gasification activities to thrive solely on the 0-percent coal royalty is “too much”, according to Singgih Widagdo, chairman of the Indonesian Mining and Energy Forum (IMEF).
Coal gasification accounts for seven of 11 downstream projects, all of which are located in coal-rich South Sumatra and Kalimantan, data from the Energy and Mineral Resources Ministry show.
“The 0-percent royalty incentive is insufficient for contract of work [PKP2B] holders who are working on coal-to-dimethyl ether [DME] projects,” he told The Jakarta Post on Monday.
The economics of coal-to-DME processing facilities were complicated by numerous external factors, including a limited number of gasification technology owners, which were expected to affect mining firms’ capital expenditure, he explained.
“Developing such projects is no easy feat [...] and thus needs the government’s [full] support,” he said.
