The Indonesian government is preparing a range of incentives for domestic coal companies to process coal into value-added products, the Ministry of Energy and Mineral Resources (ESDM) said.
Irwandy Arif, special staff to the energy minister for accelerating mineral and coal governance, stated the government is readying fiscal and non-fiscal incentives for coal companies undertaking coal downstream programs in Indonesia.
Arif explained there will be a special coal royalty tariff incentive for coal gasification, potentially reducing royalties to 0%.
There will be a special coal price for downstream projects. Arif highlighted that a "cost + margin" concept will be applied for coal downstream activities in the vicinity of mining areas.
Meanwhile, the government will provide assurances that coal supply for downstream projects will remain available. "Domestic market obligation (DMO) will be used for gasification and other purposes," Irwandy added.
"This is an overview and the details are currently being considered by the government to facilitate coal downstream projects," he said.
Several domestic coal companies, such as PT Bukit Asam Tbk (PTBA) and PT Bumi Resources Tbk, are planning to engage in coal downstream projects.
PTBA is set to undertake a coal gasification project to produce dimethyl ether (DME) in South Sumatra. Following the withdrawal of U.S. investor Air Products and Chemicals Inc from the DME project, PTBA is currently exploring cooperation with Chinese companies.
Meanwhile, Bumi has partnered with a new Chinese entity to develop a coal gasification project in Indonesia. Financial closing for the project is targeted to be achieved this year.
(Writing by Alex Guo Editing by Harry Huo)
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