Discussions on Producing Gasoline from Coal

The government is working to reduce its dependence on imported energy by utilizing domestic resources, one of which is producing gasoline from coal.

This plan begins with a coal gasification project to produce methanol in East Kutai, which was officially launched on August 31, 2026, and is scheduled for commissioning in 2029. (source: esdm.go.id)

Why Does the Government Want to Reduce Fuel Imports?

Citing ekonomi.bisnis, the Ministry of Energy and Mineral Resources (ESDM) notes that current national gasoline demand has reached 40 million kiloliters per year. Meanwhile, domestic production capacity remains below that demand.

On the other hand, energy imports also place a burden on the trade balance and foreign exchange reserves, prompting the government to encourage the use of domestic raw materials.

One example is diesel. The B50 biodiesel mandate—a 50% biodiesel blend in diesel—will take effect in July 2026, and the Minister of Energy and Mineral Resources has announced that Indonesia will stop importing diesel.

In fact, the government has already suspended import permits for CN48-grade diesel since early 2026. This is what ultimately prompted the government to take similar action regarding gasoline demand.

Challenges in Producing Gasoline from Coal

Although the issue has been seriously discussed and concrete steps have been taken, this initiative is still overshadowed by a number of challenges that the government must anticipate, ranging from investment costs and environmental impacts to support from various stakeholders.

Investment Costs and Economic Viability

The Indonesian Mining Experts Association (Perhapi) stated that it has no official information regarding the actual costs of processing coal into methanol or the investment value, as feasibility studies are generally conducted behind closed doors.

The key factor is the product’s ability to compete with similar products in the global market. The longer the processing chain, the more cost factors must be taken into account. (source: perhapi.or.id)

Precedents from Previous Projects

Air Products and Chemicals, based in the United States, has withdrawn from the consortium for a coal gasification project to produce DME in partnership with PTBA and Pertamina—a project with an investment value of approximately US$2.1 billion. (source: cnnindonesia.com)

According to bloombergtechnoz.com, PTBA is still seeking new partners to continue the project.

Emissions and Environmental Impact

The environmental impact assessment remains a subject of debate. Trend Asia notes that processing coal into methanol or DME produces higher levels of carbon dioxide and greenhouse gas emissions compared to conventional fossil fuels.

Policy Support

The government has prepared incentives, including contract extensions for IUPK holders implementing gasification projects, a 0% royalty rate, and tax benefits leveraging the implementation of the Global Minimum Tax.

However, Trend Asia notes that the 0% royalty incentive must also be weighed against the potential loss of government revenue.

Impact on Logistics and the Supply Chain

Changes in energy supply and prices inevitably affect transportation and distribution costs. Therefore, partnering with a logistics provider that offers comprehensive services helps ensure the smooth operation of the supply chain amid uncertainty.

One logistics company offering Freight Forwarding services to support logistics operations is SELOG, a subsidiary of PT Serasi Autoraya (SERA), which is also part of the Astra Group.

With over 20 years of experience, SELOG is recognized as a provider of comprehensive logistics solutions, including Trucking services with a diverse fleet selection.

In addition to trucking, SELOG also offers other logistics services to address every business need, ranging from freight forwarding, shipping, and warehousing to project cargo.

SELOG’s services are also supported by the latest digital technologies, which not only simplify operations but also enhance business effectiveness and efficiency.

One example is the implementation of the Astra Fleet Management Solution (AstraFMS) and the Warehouse Management System (WMS).

For more information about SELOG’s profile and services, visit the website www.selog.astra.co.id and follow SELOG on social media: