Government mulls options on Semirara coal contract

MANILA, Philippines — The government has yet to decide whether to grant a 13-year coal contract extension to Consunji-led Semirara Mining and Power Corp. (SMPC) or open the deal to other firms.

Although no other players have officially expressed intent, Energy Secretary Sharon Garin said SMPC’s coal operating contract could draw “some interest” due to its potential.

“So far, we don’t have any official or unofficial notice here at the DOE (Department of Energy),” Garin said when asked if other companies are interested in taking over SMPC’s contract, set to expire next year.

The contract, which grants SMPC the exclusive right to explore, develop and conduct coal-mining operations on Semirara Island in Antique, was originally set for 35 years.

The DOE later extended it by 15 years, moving its expiration from 2012 to July 2027.

According to Garin, SMPC is requesting an additional 13 years to make up for the period when the contract was still under government control.

“We’re still under discussion together with our legal team on what to do because we have to assess if the claim of Semirara is correct. But we will decide within the quarter,” the energy chief said.

Given the complexity of operations on Semirara Island, SMPC is “probably the only company in the world” capable of carrying out this type of mining, Garin noted.

Besides exclusive coal-mining operations in the area, SMPC also enjoys several incentives, including exemption from all taxes except income tax, under its existing contract.

The contract also waives tariff duties and compensating tax on the importation of machinery, equipment and materials required for coal operations, subject to certain conditions.

SMPC chairman and CEO Isidro Consunji had hoped to secure the proposed contract amendment last year, but the decision is still pending as the DOE sought the Department of Justice’s opinion.

SMPC, the Philippines’ leading coal producer, currently accounts for around 99 percent of the domestic production.

The company is expected to maintain coal production at around 15 million tons through 2030, according to the International Energy Agency.