Subsidies and Special Royalties for Coal Gasification

The Ministry of Energy and Mineral Resources (ESDM) is currently preparing a special royalty tariff scheme for companies investing in coal gasification. This regulation will be stipulated in the amendment to Regulation of the Government No. 26 of 2022 on Types and Tariffs of Non-Tax State Revenue (Penerimaan Negara Bukan Pajak – “PNBP”) Applicable at the Ministry of Energy and Mineral Resources (“Regulation 26/2022”), along with its implementing regulations, which are still under discussion.

“As planned, the goal is to find a way for it to be competitive with LPG, because in general, the investment costs are still quite high,” said Siti Sumilah Rita Susilawati, Secretary of the Directorate General of Mineral and Coal.

The government is also proposing subsidies for Dimethyl Ether (“DME”) to make it competitive with LPG. This subsidy is expected to reduce the selling price and encourage the use of DME as an alternative energy.

The government plans to provide various incentives for companies developing coal gasification, such as tax relief and streamlined licensing processes. This support is expected to attract more investors to participate in the project.