SMPC challenges Semirara bid rules, warns of coal disruption

Semirara Mining and Power Corp. (SMPC) has challenged government bidding requirements it says could effectively exclude it from competing to operate the Semirara coal mine when its current contract expires in July 2027.

The dispute carries risks beyond the company’s contract: SMPC warns that a change in operator could interrupt coal deliveries to power plants, reduce government revenue, and raise electricity costs for households and businesses.

The Department of Energy (DOE), however, announced on Sept. 19 that it had terminated the 2026 coal bid round covering three predetermined areas to reassess the award rules and secure greater benefits for the state and consumers.

The terminated round included 10 coal blocks on Semirara Island in Caluya, Antique, according to the DOE’s announcement of the offering.

SMPC said the rules it disputes require the incumbent operator to submit a complete asset list and surrender those assets to the government if it joins the bidding.

“We are the only company covered by this rule. This is unfair and basically bars us from bidding,” SMPC said in a disclosure.

The company argued that the requirement conflicts with Presidential Decree No. 972, which it interprets as allowing it to remove its assets within one year after its operating contract expires.

Section 11(c) of the decree provides that movable materials, equipment, plants, and other installations placed by the operator in the exploration or production area become government property if not removed within one year after the contract ends.

That provision does not, by itself, resolve the parties’ dispute over which assets must be turned over.

SMPC also questioned what it described as the absence of prequalification and mining-experience requirements for other bidders, with the highest financial offer serving as the sole basis for the award.

The company warned that coal production could fall to zero during a transition to another operator in July 2027, leaving the government without royalty payments from production during that period.

A replacement operator would have to acquire hundreds of pieces of heavy equipment and large mining trucks, hire and train thousands of workers, and raise operating funds amounting to billions in PHP, SMPC said.

The incoming operator would also need to be ready to carry out the required mining plan by the takeover date, the company added.

SMPC cited the mine’s technical demands as another challenge for any successor.

“Semirara is no ordinary mine. We are mining in the sea, deeper than the height of the highest building in Makati. We have to pump out the equivalent of 12 Olympic-size swimming pools or Pasig River’s torrent every hour just to get to the coal,” SMPC said.

The company said it paid PHP 43.4 billion in government share and PHP 3.7 billion in taxes from 2021 through the first half of 2026.

SMPC also warned that electricity rates could rise if supplies were disrupted because Semirara coal is used for baseload power generation, which serves continuing electricity demand.

The supplied statement gives no estimate of a possible rate increase or the duration of a production stoppage.

The company questioned the shift from choosing the most capable mining operator to prioritizing the highest financial bid, arguing that the change benefits only the potential winner.

In its Sept. 19 statement, the DOE said it would revise the evaluation framework to give greater weight to measurable and enforceable economic benefits, including government revenue and domestic-use commitments intended to lower electricity costs.

The department also cited water seepage that could affect extractable reserves and the asset dispute with the incumbent operator as uncertainties affecting prospective bidders’ plans.

SMPC said it is studying options to protect its legal interests.