Government plans coal-based petrochemical industry

The Ministry of Industry is drafting a plan to develop a coal-based petrochemical industry in a bid to end the dependency of local petrochemical industry on imported naphthalene, Kontan reported on Monday.

The paper quoted Muhammad Khayam, Director of Basic Chemical Industry at the Ministry of industry, as saying that realizing the plan would require about US$1 billion investment to develop coal gasification facilities, the output of which to be further processed into methanol, and then ethylene, propylene, and plastic products.

He added that the coal gasification facilities will be set up in East Kalimantan and South Sumatra. The government is currently considering financing options whether the project would be funded via the state budget, or through public private partnership scheme.

The government hopes state-owned oil and gas firm PT Pertamina and state-controlled coal giant PT Bukit Asam Tbk to become operators of the coal gasification projects, Khayam said.

He added that the government hopes the project could start construction in 2017, and completed in 3-4 years time.

The paper said that Germany?s Ferrostaal GmbH, which plans to develop a petrochemical industry in West Papua, is considering the methanol output from the coal-gasification project as an alternative in case the expected gas supply from the Tangguh project in West Papua is hampered. (*)