Semirara Mining and Power Corp. (SMPC) has cited P70.5 billion in government remittances over the past 29 years as it renewed concerns over the bidding rules for the coal operating contract covering its mine on Semirara Island in Antique.

In a statement issued on Monday, the Consunji-led coal producer warned that prioritizing financial bids over mining experience could disrupt production and affect future government revenues if a new operator is unable to sustain operations.

The company questioned the use of the highest financial offer as the sole ranking factor in selecting the winning bidder, arguing that mining experience and technical capability should carry greater weight.

“The highest bidder with no experience will produce zero coal, resulting in zero royalty payments to the government, a complete defeat of the DoE’s (Department of Energy’s) objective of raising the most revenues,” SMPC said.

The objection frames the trade-off at the center of the award process: maximizing the government’s take from the bidding versus preserving the operational continuity that, SMPC argues, future royalties depend on.

It also questioned what it described as the absence of penalties for a winning bidder that fails to produce coal.

“The bidding rules discourage industrialization. We hope the DoE realizes that its bidding rules directly contradict the sales pitch of our top officials when they go abroad to invite investors,” it added.

SMPC also said it contributes approximately P600 million annually to its host municipality of Caluya for education, healthcare, and livelihood programs, while more than 4,000 jobs could be affected by the bidding process.

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

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 would seek to ensure appropriate economic returns and benefits from the development of the country’s coal resources. Any reworked framework would set the ranking criteria applied to bidders for the contract covering the Semirara Island mine.

The earlier bidding framework required legal, technical, and financial qualifications, although SMPC has questioned the weight assigned to financial offers in ranking qualified bidders.

Separately, SMPC filed a petition for declaratory relief before the Makati Regional Trial Court in July seeking clarification of its rights and obligations concerning mining assets and information under its existing contract.

SMPC did not provide a quantified estimate of potential future royalty losses arising from the bidding rules. Developments to watch from here include the outcome of the DoE’s review of the award framework and the Makati Regional Trial Court’s handling of SMPC’s petition.

— Sheldeen Joy Talavera

Source: BusinessWorld