The Department of Energy (DOE) will open the Semirara Mining and Power Corp. (SMPC) coal contract to competitive bidding ahead of its 2027 expiration, rejecting a renewal and forcing a fresh contest for control of one of the country’s most critical fuel sources.

Energy Secretary Sharon S. Garin said in a recent interview with reporters on Sunday that the agency decided to auction the contract instead of extending it, in accordance with the Department of Justice's (DOJ) legal guidance.

Despite SMPC’s preference for an extension, Garin said the DOE must proceed with a new bidding process.

“Our direction is to have it auctioned. We have a schedule; it should be bid out within the year. We need to have it ready because you wouldn’t want the current investor or operator to stop doing anything or move out,” Garin said. 

Garin said the DOE will follow the DOJ's legal opinion, which does not allow the contract to be renewed, and will instead open the project to qualified bidders, including SMPC. 

She acknowledged, however, that the current operator still holds a natural advantage given its experience and existing infrastructure on the island.

“We have already gotten the opinion, and we will follow the opinion that there cannot be a renewal,” she added. 

Foreign firms may also participate, although constitutional limits on natural resource extraction could restrict their involvement, she said.

The coal operating contract was issued in 1977, granting SMPC exclusive rights to explore, develop, and mine coal on Semirara Island. 

Originally set for 35 years, the DOE extended it by 15 years, moving its expiration to 2027.

In the first nine months of 2025, SMPC saw its net income fall 37 percent to P9.9 billion from P15.7 billion a year ago, as lower coal and electricity prices and higher production costs offset record coal output and power sales.

Benchmark coal prices and spot electricity rates declined sharply during the period, dragging average selling prices despite a 5 percent rise in coal shipments to 12.9 million metric tons and a 12 percent increase in power sales to 4,186 gigawatt-hours.

As of the end of September 2025, 40 percent of SMPC’s 860 megawatts (MW) dependable capacity was under contract. After accounting for station service, 429.60MW was available for spot market sales.