JAKARTA, RAKYAT NEWS – The Indonesian Ministry of Energy and Mineral Resources (ESDM) has unveiled plans to construct a new oil refinery with a capacity of 500,000 barrels per day. This ambitious project, estimated to cost $12.5 billion (approximately Rp 203.87 trillion), is part of the government’s broader strategy to strengthen national energy security. The refinery is designed to process both domestic and imported crude oil, aiming to reduce Indonesia’s reliance on imported fuel and ensure a more stable energy supply.

The project is expected to be funded by Danantara, Indonesia’s sovereign wealth fund, following a thorough due diligence process. ESDM Minister Bahlil Lahadalia emphasized that the refinery will be one of the largest in the country, with a production capacity of 531,500 barrels per day. This initiative is part of the first phase of 21 downstream projects approved by President Prabowo Subianto, with a total investment value of $40 billion.

The new refinery is projected to save Indonesia up to $16.7 billion annually by reducing oil imports. Additionally, it is expected to create significant employment opportunities, with estimates suggesting the absorption of 63,000 direct jobs and 315,000 indirect jobs. This aligns with the government’s goal of boosting economic growth and reducing unemployment through large-scale infrastructure projects.

President Prabowo has approved the first phase of downstream projects, which include not only the oil refinery but also other initiatives such as coal gasification and the construction of crude oil storage facilities on Nipah Island, Batam. These projects aim to enhance Indonesia’s energy resilience by ensuring a 30-day domestic crude oil supply and diversifying energy sources.

The downstream projects span multiple sectors, including mining, agriculture, fisheries, and forestry. Minister Bahlil highlighted that the government plans to expand the number of projects in subsequent phases, with a long-term target of attracting $618 billion in investments. This comprehensive approach underscores Indonesia’s commitment to achieving energy independence and sustainable economic development.

Danantara’s role in financing these projects has been met with both optimism and caution. While the sovereign wealth fund is expected to provide significant financial support, experts have raised concerns about the risks associated with large-scale investments in downstream industries. Minister of Investment and Downstream Industries Rosan Roeslani assured that Danantara would follow proper procedures, including due diligence, before committing funds.

The refinery project is part of Indonesia’s broader strategy to maximize the value of its natural resources through downstream processing. By refining crude oil domestically, the country aims to reduce its trade deficit, increase revenue from exports of processed products, and strengthen its position in the global energy market. This aligns with the government’s vision of transforming Indonesia into a high-income economy by 2045.

The announcement has sparked discussions about the potential economic and environmental impacts of the project. While the refinery is expected to boost energy security and create jobs, critics have called for careful consideration of environmental sustainability and community welfare. As Indonesia moves forward with its downstream ambitions, balancing economic growth with environmental responsibility will remain a key challenge. (Uki Ruknuddin)

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