Indonesia plans $40 billion energy projects in 2025: Minister

JAKARTA, March 4: Indonesia plans more than 20 energy projects worth around $40 billion this year, its energy minister said on Tuesday, as the country seeks to increase its domestic refining capacity.

The projects include an initiative to use coal to create an alternative to a popular imported cooking fuel.

Coal-dependent Indonesia, Southeast Asia’s largest economy, is one of the world’s top emitters. However, President Prabowo Subianto committed last year to phasing out coal power generation over 15 years and reaching net-zero emissions by mid-century.

“We have presented approximately 21 projects… with a total investment of around $40 billion,” energy minister Bahlil Lahadalia said in a statement published by the presidential palace on Tuesday after meeting with Prabowo.

The projects are part of a larger effort to grow Indonesia’s economy and create jobs by improving the country’s capacity to refine commodities, ranging from oil to nickel.

Among the plans is a project to use coal to produce dimethyl ether (DME) as a substitute for liquefied petroleum gas (LPG).

“We will do this so that the product can truly be marketed domestically as an import substitute,” Bahlil said.

Most of the LPG sold domestically in Indonesia in 2023 was imported.

An oil refinery with a capacity of around 500,000 barrels per day and an oil storage facility will also be built, he added.

The projects will be funded in part by the archipelago’s new sovereign wealth fund, Danantara, which launched last month to oversee more than $900 billion in assets, he said.

“What is clear is that the purpose of investment is to create quality jobs, add value, and increase state revenue and national economic growth,” Bahlil said.

Recently inaugurated, Prabowo has pledged to increase Indonesia’s annual growth from 5% to 8%, while ordering billions of dollars’ worth of cuts across government.

The government said Danantara would have an initial budget of $20 billion, and Prabowo mentioned last month that it would be used for “20 or more high-impact national projects” this year.

Prabowo’s budget cuts, made to fund Danantara and other projects like an ambitious multi-billion-dollar free lunch program, sparked student-led protests in multiple Indonesian cities last month.

AFP / RSS