Government plans incentives for coal processing projects

The government plans to provide incentives for coal miners and other investors engaged in coal processing projects such as coal gasification and coal upgrading, Bisnis Indonesia reported on Wednesday.

The paper quoted Director General of Mineral and Coal R. Sukhyar as saying that coal processing is strategic for the country to generate greater value from the commodity.

He said that one of the planned incentives is lowering the price of coal as feedstock for the coal processing projects.

The price of coal used in mine-mouth power plant projects and others such as coal processing is based on a formula of production cost plus a 25 margin.

Sukhyar said the government was considering to either eliminate, or lower the 25 percent margin to reduce the coal price and improves the economic feasibility of coal gasification project.

He cited as an example that South Korea?s Kepco which has conducted a two-year study for a coal gasification project in Indonesia in a partnership with coal miner PT Pendopo Energi Nusantara, which will require annual coal supply of 5 million tons, is awaiting for the Ministry of Energy and Mineral Resources to revise the coal price formula. (*)