President of the Republic of Indonesia Joko Widodo attends the groundbreaking ceremony of the coal gasification plant in south Sumatra, Indonesia. (Photo: President of the Republic of Indonesia)

PT Bukit Asam Tbk launched the construction of a coal gasification plant on Monday, January 24, which is in line with the Indonesian government’s efforts to reduce dependence on imports of liquid petroleum gas (LPG). Through this project, low-calorie coal will be converted into syngas and processed into methanol to produce dymethyl ether (DME) as an alternative to LPG.

A groundbreaking ceremony for the project, which is a collaboration with PT Pertamina (Persero) and Air Products and Chemicals Inc., was held in the Tanjung Enim Industrial Estate, Muara Enim, South Sumatra. Attended by the President of the Republic of Indonesia Joko Widodo, the project, which was designated as a national strategic project through presidential decree in 2020, was officially started.

President Director of Bukit Asam Arsal Ismail said that the groundbreaking was a historic moment in the development of project collaboration.

Arsal added that the downstream coal project into DME is in line with Bukit Asam’s transformation and focus on developing the downstream industry to provide optimal added value for coal. The plant is designed to use 6 million metric tons (mt) of low rank coal to produce 1.4 million mt of dimethyl ether (DME) annually, which can reduce Indonesia’s LPG import by 1 million mt per year, he added.

The project is expected to take 30 months to complete and will be carried out in Tanjung Enim for 20 years with a total investment of US$2.1 billion.

President Widodo said LPG imports accounted for 80.5% of last year’s consumption of around 7.95 million tons. This project could reduce the state budget subsidy up to IRD7 trillion (US$486.5 million), he added.