Indonesia Finally Begins Construction of LPG Replacement Project, Here is Its Owner
PT Bukit Asam Tbk (PTBA) and PT Pertamina (Persero) have begun construction of a downstream coal project to produce Dimethyl Ether (DME), one of the initiatives to reduce reliance on imported Liquefied Petroleum Gas (LPG).
The project, managed by the Badan Pengelola Investasi Daya Anagata Nusantara (BPI Danantara), is designed to strengthen national energy sovereignty in line with the government’s Asta Cita.
Located in Tanjung Enim, the project involves collaboration between the Mining SOE Holding MIND ID, PT Bukit Asam Tbk (PTBA), and PT Pertamina (Persero). Its groundbreaking coincides with 12 other downstream projects.
PTBA’s Director of Downstreaming and Product Diversification, Turino Yulianto, explained that the project marks a significant milestone in transforming Indonesia’s mining industry through coal industrialisation.
He noted that the facility uses clean coal technology capable of reducing emissions by up to 40% compared to conventional combustion.
“This project is highly significant as it is a national strategic project with a capacity of 1.4 million tonnes of DME, equivalent to around 1 million tonnes of LPG,” he stated during his speech in Tanjung Enim on Wednesday (29/4/2026).
The facility, built in the 585-hectare Bukit Asam Industrial Estate (Beki), will process approximately 7 million tonnes of low-quality coal per year. All raw material supplies come from the Tanjung Enim mine, and the final product will be absorbed by PT Pertamina Patra Niaga.
“We are processing low-rank coal, which has previously been unutilised, and there is a lot of it in Indonesia. Once this project is operational, God willing, if it continues to develop, we can utilise low-rank coal in Indonesia,” Turino elaborated.
On the other hand, Pertamina’s Director of Strategy, Portfolio, and Business Development, Emma Sri Martini, stated that the collaboration addresses Indonesia’s dependence on global energy supplies. She affirmed that Pertamina is ready to act as a standby buyer (offtaker) to ensure market certainty for the coal downstreaming products.
“Alhamdulillah, Indonesia has managed to maintain the availability of fuel and LPG. It is not easy, ladies and gentlemen; we know well that Indonesia is still a net importer and has not yet achieved energy self-sufficiency, especially for LPG,” she said on the same occasion.
Emma revealed that Indonesia’s national energy resilience for the LPG sector is currently only supplied domestically at 12-15%. Therefore, the Coal to DME project is expected to commence operations in 2028 to reduce the import burden of gas, which reaches 7 million metric tonnes per year.
“The Coal to DME solution is a concrete approach to optimising domestic resources, substituting imports, enhancing energy resilience, with real multiplier effects and wide economic impacts, providing extraordinary socio-economic benefits,” she added.
In addition to strengthening energy stocks, this mega project is projected to absorb 5,380 workers, from the construction phase to operations. PTBA’s management is committed to prioritising the absorption of local workers from South Sumatra to deliver direct economic impacts to communities around the mine.