JAKARTA, KOMPAS – The government is asked to control coal production according to the National Medium Term Long Term Plan or the 2015-2019 RPJMN. Production is controlled so that coal can be used as an asset to drive the domestic economy and encourage a switch to clean energy sources. However, on the other hand, dependence on coal in the state revenue sector is still high.

According to the 2015-2019 RPJMN, coal production in 2015 should be 425 million tons. However, the realization reached 461 million tons. In 2018, the realization of production was almost 500 million tons, far exceeding the RPJMN benchmark of 406 million tons. Meanwhile, the production benchmark for 2019 is 400 million tons.

“Uncontrolled production and pursuing the demands of the export market is unnatural because it does not consider the balance of natural reserves and carrying capacity,” said the National Coordinator of Publish What You Pay (PWYP) Indonesia, a civil society coalition for transparency and accountability of extractive resources, Maryati Abdullah, Wednesday (2/1/2019), in Jakarta.

Maryati gave an example of land subsidence in residential areas in Sanga-sanga District, Kutai Kartanegara Regency, East Kalimantan, at the end of November last year. The strong cause of the incident was allegedly coal mining activity. Massive mining also leaves ex-mining holes that have claimed a number of lives.

Another problem is that coal production, which is focused on exports for foreign exchange, is not attractive enough for the domestic value-added creation program. The goal of increasing employment and other impacts in the downstream sector will not be achieved. Management of extractive natural resources as a source of foreign exchange must be converted into domestic development capital.

“Meanwhile, many other countries have reduced the use of coal as an energy source by switching to renewable energy sources that are cleaner and lower emissions,” said Maryati.

Deputy Chairman of the Indonesian Chamber of Commerce and Industry for Mineral Resources, Coal and Electricity, Garibaldi Thohir said that coal still plays an important role in the primary energy source for electricity generation in Indonesia. He gave an example of the use of coal in other developed countries such as the United States and China. In America, coal is the second primary energy source for electricity generation after gas. In China, the energy mix for coal contributed 58 percent.

“The mineral and coal sector contributed Rp 40.6 trillion in non-tax state revenue in 2017. For job creation, the multiplication value of coal mines has almost doubled,” said Garibaldi during a speech at the International Energy Agency (IEA) Coal Forecast to 2023, some time ago, in Jakarta.


Encourage downstream

On various occasions, the Minister of Energy and Mineral Resources (ESDM) Ignasius Jonan has encouraged coal entrepreneurs to carry out coal downstreaming in the country. One of the downstream programs that the government wants is coal gasification, which is the process of converting coal into gas.

The program is considered to be able to reduce dependence on LPG imports which reached 70 percent. Of the total LPG consumption of 6.7 million tonnes per year, Indonesia imports nearly 5 million tonnes per year. The import value is equivalent to 3 billion US dollars a year.

“Entrepreneurs should not only dig and sell. In other countries, such as China, coal can be processed into avtur. Coal gasification must continue to be encouraged so that dependence on LPG imports can be reduced, “said Jonan.

However, regarding coal gasification, a number of parties are of the opinion that the government must step in directly to lead the program. On the one hand, there is no regulation or road map that becomes a reference for entrepreneurs to gasify coal. The government admits that it is preparing a number of regulations related to coal downstreaming.

Previously, PT Bukit Asam Tbk collaborated with a company from the United States, Air Products and Chemical Inc, to build a coal gasification industry in Indonesia. The memorandum of cooperation with Air Products and Chemical Inc. was signed by Bukit Asam and Pertamina some time ago. The American company controls coal gasification technology which Bukit Asam will later use.

The Bukit Asam gasification project will convert coal into urea as raw material with a capacity of 500,000 tons per year, 400,000 tons of dimethyl ether per year, and 450,000 tons of polypropylene per year. The location plan for the coal gasification unit is in the Bukit Asam coal mine area in Tanjung Enim, Muara Enim Regency, South Sumatra.