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DME used to reduce LPG imports likely to require Indonesian subsidy

November 25, 2020


Indonesia would need to subsidise the coal-derived substitute that it has hung its hopes on to reduce its import bill for liquefied petroleum gas (LPG), industry experts told Asia’s biggest coal industry event said on Wednesday.

The government wants to cut LPG imports, while optimising use of domestic coal assets, and creating jobs in a downstream coal industry. Just last month, President Joko Widodo urged relevant ministers to accelerate plans to build plants for gasification, liquefaction and upgrading coal.

Unless the production of dimethyl ether (DME), the substitute derived from coal, is subsidised, the government should look at other ways to cut consumption of LPG, experts said.

“It is better to turn households over to using electric stoves, because DME will not be feasible without a government subsidy,” Joseph Pangalila, vice-president director of Cirebon Power said at the virtual Coaltrans Asia conference.

The Institute for Energy Economics and Financial Analysis estimated earlier this month the DME from a plant proposed by state coal miner PT Bukit Asam would cost US$470 per tonne, nearly twice the price Indonesia paid for LPG imports. 

[Staff Report]

More: Indonesia’s coal gasification programme needs subsidy: industry experts

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