DOE aborts 2026 Semirara coal auction

MANILA, Philippines — After nearly five months of delays, the Department of Energy (DOE) has terminated its 2026 coal bid round, headlined by the country’s largest coal mine on Semirara Island in Antique.

In an advisory dated Sept. 15, the DOE said it scrapped the auction covering three pre-determined areas for development and production coal operating contracts after stakeholders raised concerns during the pre-submission conferences.

It also cited ongoing water seepage and other developments affecting Semirara Island, along with legal considerations, saying these warranted a reassessment of the evaluation criteria for awarding the contracts.

The move is meant to allow the DOE to review and further develop a “fair, equitable, transparent and comprehensive” framework for bidding on areas with confirmed or established coal reserves.

“Such a framework shall, consistent with the national interest, give due consideration to securing appropriate and measurable economic returns and benefits commensurate with the value and characteristics of the offered area,” the DOE said.

The decision came on the same day Energy Secretary Sharon Garin said the bidding would still “happen within the year.”

Garin had earlier underscored the importance of the auction, particularly because it involves the Semirara coal mine, which she said accounts for around 10 percent of the country’s total coal requirements.

The 2026 coal bid round was launched in February but postponed in April as the DOE worked to address clarifications sought by prospective bidders.

Proposed evaluation framework

Now, the agency is proposing a national interest evaluation framework that would make the financial offer the “sole ranking factor” among qualified bidders.

The proposed framework contradicts Garin’s earlier pronouncements that the coal auction would not hinge on financial bids but on bidders’ technical qualifications.

If the government pushes through with the proposed guidelines, the Semirara coal auction will follow a two-stage evaluation process to determine the winner.

The first, or pass-or-fail, stage will determine whether bidders meet the eligibility requirements, including legal standing, technical capability and financial capacity.

Only those that clear the first hurdle will advance to the ranking stage, where financial offers will determine the final ranking, with the highest bid taking the top spot.

Consunji-led Semirara Mining and Power Corp. (SMPC), the current operator of the Semirara coal contract, has submitted written comments and recommendations opposing some provisions of the proposed rules.

One of its key recommendations is to restore technical capability and work-program quality as scored or weighted factors in the ranking stage, rather than treating them as mere pass-or-fail requirements.

SMPC, whose contract expires in July 2027, warned that a pass-or-fail system would “treat all passing bidders as technically equivalent.”

The company also cautioned that the provision could be prone to abuse, potentially allowing bidders with weak technical capabilities to qualify as long as they meet the minimum threshold.

This could also leave no mechanism to recognize bidders with genuinely stronger technical credentials, it stressed.

High capital requirements

In a recent chance interview, SMPC chairman and CEO Isidro Consunji estimated that producing 16 million metric tons of coal annually would require at least P55 billion in capital spending for equipment alone.

This raises the question of whether other companies will still find it worthwhile to bid for the new Semirara coal contract, given the mine’s estimated remaining life of only around eight years.

Meanwhile, market watchers told The STAR that further delays in the auction could prolong uncertainty over SMPC’s largest and most important mining asset.

“The risk is that prolonged uncertainty could begin affecting SMPC’s capital-allocation decisions. Mining requires continuous investment,” Globalinks Securities and Stocks Inc. head of sales trading Toby Allan Arce said.

He added that further delays could also give SMPC a “practical advantage” as the current operator.

“The closer the bidding process gets to the contract expiration, the more difficult it becomes for a new operator to conduct due diligence, prepare a mine plan and ensure a seamless transition,” Arce added.