Semirara Mining and Power raises coal contract bidding concerns in Antique

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Semirara contract concerns Antique

Highlights

Semirara Mining and Power Corp. warned that prioritizing financial bids over mining experience for its Semirara Island coal contract could jeopardize sustained production and government royalties.
SMPC reported remitting P70.5 billion to the government over 29 years and annually contributing about P600 million to Caluya for education, healthcare, and livelihoods.
The Department of Energy halted its coal bidding round in September for a regulatory review focused on ensuring appropriate economic returns and qualified bidder selection.

Contract renewal dispute and bidding criteria

As reported by BusinessWorld Online, Semirara Mining and Power Corp. said in a statement on Monday that ranking bidders mainly by financial offer, rather than mining experience and technical capability, risks handing the coal contract to an operator that may be unable to sustain production.

The Consunji-led company argued that the highest financial bid should not be the sole ranking factor for the coal operating contract covering its mine on Semirara Island in Antique. SMPC said a bidder without mining experience could fail to produce coal, which in turn would leave the government with no royalty payments and defeat the Department of Energy's goal of maximizing revenues.

SMPC also questioned what it described as the lack of penalties for a winning bidder that fails to produce coal. The company said the rules discourage industrialization and conflict with efforts by Philippine officials to attract investors.

SMPC operates the Semirara mine under Coal Operating Contract No. 5, which is scheduled to expire on July 14, 2027. Under the current contract, the company is required to remit a government share equivalent to 30% of net proceeds from coal operations, subject to the contract's provisions.

Revenue, jobs and regulatory review

SMPC said it has remitted P70.5 billion to the government over the past 29 years and contributes about P600 million each year to its host municipality of Caluya for education, healthcare and livelihood programs. It added that more than 4,000 jobs could be affected by the outcome of the bidding process.

The Department of Energy terminated its earlier coal bidding round in September to reassess the award framework, citing operational, legal and economic considerations. The department said the review is intended to ensure appropriate economic returns and benefits from developing the country's coal resources.

The earlier framework required legal, technical and financial qualifications, although SMPC has continued to question the weight given to financial offers in ranking qualified bidders. Separately, the company filed a petition for declaratory relief before the Makati Regional Trial Court in July seeking clarification of its rights and obligations over mining assets and information under its existing contract.

SMPC did not provide a quantified estimate of possible future royalty losses under the current bidding rules.

Our earlier coverage of planned Philippine sovereign bond reforms explained how a new pricing convention for peso government bonds and prospective index inclusion could widen the investor base and improve liquidity. We also noted that these market upgrades won’t automatically translate into stronger real-economy investment unless they’re matched by credible, well-enforced rules and broader reforms that build investor trust and channel financing into productive activity.

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