Consumer group backs DOE bidding for Semirara coal contract

Insider Spotlight

• Nasecore backs the DOE’s competitive bidding for the Semirara coal contract, prioritizing consumer benefits
• The group questions incumbent SMPC’s declining coal production, investment and workforce
• Reduced domestic coal supply could increase electricity prices and dependence on imported fuel

A Philippine electricity consumer group backed the Department of Energy’s (DOE) bidding for the next Semirara coal operating contract, and urged the government to choose an operator based on guaranteed economic benefits for the state and consumers rather than longstanding control of the mine.

In a statement issued on Oct. 19, 20206, the National Association of Electricity Consumers for Reforms (Nasecore) made this assertion as Consunji-controlled incumbent, Semirara Mining and Power Corp. (SMPC), faces falling production and reduced investment in the country's largest coal mine.

The group stressed that it was not endorsing any particular bidder. SMPC’s coal operating contract expires on July 14, 2027.

Competition over incumbency

In its statement, Nasecore questioned whether SMPC’s five decades of mining experience should outweigh recent operating results when the DOE evaluates bids.

Pete Ilagan

The Nasecore chief warned that the SMPC's deteriorating operations threaten coal prices and electricity costs.

Citing company disclosures, it said SMPC slashed its 2026 capital expenditure budget by 68 percent to P1.9 billion from P5.9 billion. Spending allocated to coal operations dropped 83 percent to P800 million from P4.8 billion.

Second-quarter coal output declined 55 percent to 2.5 million metric tons from 5.6 million metric tons a year earlier. Nasecore cited redundancy notices affecting 1,458 mine employees and flooding problems at the Acacia mine.

Consumer costs at stake

Semirara supplies about 97 percent of Philippine domestic coal production, according to Nasecore. The group warned that lower output could increase reliance on imported coal, exposing power producers and consumers to fuel prices.

It raised concerns about SMPC’s dispute with the government over ownership of cost-recovered mining equipment. A standoff, it argued, could delay a successor operator’s takeover and disrupt coal supply.

The group acknowledged that technical assessments of mining operations belong to the DOE and other regulators, not consumer advocates.

Performance commitments

The group said bids should be judged on tangible benefits that operators can deliver, rather than incumbency alone.

“Nasecore does not take a position on which entity should win the next Semirara coal contract. That is the DOE’s decision to make,” the organization said though its president Petronilo Ilagan.

It urged the government to make consumers’ interests central to the auction, warning that falling domestic coal supply could translate into higher electricity generation charges. —Daxim L. Lucas | Ed: Corrie S. Narisma