Jakarta. Indonesia revealed Thursday that a Chinese investor was interested in Indonesia’s coal gasification plan in a possible deal worth around $1.2 billion.

Coal gasification is the process of turning the combustible black rock into a synthetic gas like dimethyl ether (DME). The domestic DME production can help Indonesia cut its reliance on liquefied petroleum gas (LPG), thus making energy prices more affordable for its people. Coal gasification has long been on the government’s wishlist, but progress has been lackluster after American gas company Air Products’ exit. Efforts are now underway to revive the ambition.

The Energy Ministry recently submitted pre-feasibility studies of dozens of Indonesia's downstream sector development projects to the sovereign fund Danantara. These documents would help Danantara decide whether they would finance the projects. Some were related to coal gasification and totaled Rp 164 trillion ($9.9 billion) in value.

Tri Winarno, a senior official at the Energy Ministry, said that a Chinese company had emerged as a potential partner in the DME program. He also reported that the company’s internal rate of return (IRR) had exceeded 15 percent. The higher the IRR, the more attractive the investment. The government, however, refused to disclose the specifics.

“I can’t reveal the name of this [Chinese] company. You will find out later once we have worked on the details,” Tri said at the 2025 Energy and Mineral Festival in Jakarta.

According to Tri, the Indonesian government would “greatly benefit from this scheme” as the money is coming from a foreign investor. The government will also not have to bear the risks. This Chinese company will likely partner with a privately owned Indonesian firm, although Tri also preferred to keep it anonymous. 

Bukit Asam, the coal miner under the state-run mining holding MIND ID, has been pursuing the DME project. Bukit Asam, also known by its ticker code PTBA, unfortunately faced some obstacles when its foreign partner, Air Products, withdrew in favor of investing in the US due to the tax credits that Washington offers. Media reports showed that PTBA had been engaging in talks with some Chinese companies in hopes the latter would fill in Air Products’ shoes.

“[The Chinese investor] does not have to partner with PTBA or state-owned enterprises,” Tri said.

“PTBA might be more advanced [in regards to DME development] as they had done a comprehensive study [on coal gasification]. But we have to evaluate the economic aspect,” he said.

If the mysterious Chinese investor proceeds with its plan, Beijing will likely maintain its dominance in Indonesia’s foreign direct investment (FDI). According to official statistics released Tuesday, China invested $3.6 billion between January and June 2025, behind Hong Kong ($4.6 billion). Hong Kong and China are in the top 3, with close neighbor Singapore on the lead at $8.8 billion. 

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