Indonesia plans over 20 energy projects worth $40 billion in 2025 to enhance domestic refining capacity and reduce reliance on imported LPG, boosting economic growth.
 |
| Indonesia reveals plans for $40 billion in energy projects, including DME production and refinery expansions, aiming to reduce imports and spur national economic growth. Image: ChicHue |
Jakarta, Indonesia — March 4, 2025:
Indonesia is set to launch over 20 energy projects worth an estimated $40 billion in 2025 as part of its efforts to increase domestic refining capacity and reduce dependence on imported fuels. Announced by Energy Minister Bahlil Lahadalia following a meeting with President Prabowo Subianto, the ambitious projects aim to boost Indonesia's energy infrastructure while fostering economic growth and job creation.
Among the key initiatives is a project to develop coal-to-DME (dimethyl ether) technology. DME will serve as a domestic substitute for liquefied petroleum gas (LPG), which Indonesia has relied on heavily for cooking fuel. In 2023, a large portion of the LPG sold in Indonesia was imported. Lahadalia emphasized that this DME initiative would enable the country to produce and market the alternative fuel locally, reducing its import reliance.
Other projects in the pipeline include the construction of a major oil refinery capable of processing approximately 500,000 barrels of oil per day, along with an oil storage facility. These projects are part of a broader strategy to expand Indonesia's refining capacity, not only in oil but also in critical commodities such as nickel, to drive economic growth and create jobs.
Funding for these projects will come in part from Indonesia's newly established sovereign wealth fund, Danantara, which launched in February 2025 with an initial budget of $20 billion. The fund, designed to oversee over $900 billion in assets, will play a pivotal role in financing these high-impact national projects.
President Prabowo has set a bold target of increasing Indonesia's annual growth from 5% to 8%, focusing on energy and infrastructure projects to achieve this goal. However, the government's efforts to fund these initiatives, including a multi-billion-dollar free lunch program, have led to protests due to budget cuts.
Despite these challenges, Indonesia’s government remains determined to strengthen domestic energy production, create jobs, and stimulate economic growth while positioning the country to reduce its reliance on coal and reach net-zero emissions by mid-century.