The Manila Electric Co. (Meralco) and its power generation arm, Meralco PowerGen Corp. (MGen), are keeping a close eye on the upcoming Semirara Mining and Power Corp. (SMPC) coal contract auction.

The Department of Energy is moving to scrap the current operator’s contract and open a fresh contest for one of the country’s critical fuel sources.

Mine-mouth kind of auction

“Maybe it’s better if Meralco, MGen take a look at it. So it’s a mine-mouth kind of auction. I don’t know yet, but certainly it’s on our radar,” Meralco chairman Manuel V. Pangilinan said in a chance interview with reporters on Monday.

Pangilinan indicated that securing coal through the Semirara auction could give Meralco and MGen a strategic advantage by ensuring a steady supply and cutting freight costs.

Last week, Energy Secretary Sharon S. Garin confirmed that the DoE will hold a new bidding process this year to prevent supply disruptions, following a Department of Justice ruling that bars contract renewal.

While SMPC still holds an advantage with its existing infrastructure and experience, the move opens the door to new players, including foreign firms subject to constitutional limits on natural resource ownership.

Coal still a key fuel source

The Semirara contract, in place since 1977 and extended in 2012, gives exclusive rights to mine coal on the island, a key fuel source for the country’s power sector.

MGen has ongoing interests in coal development, including a 73-megawatt (MW) coal-fired plant in Toledo, Cebu, set to start commercial operations by October 2028.

The company had also planned a 1,200-MW ultra-supercritical coal plant through its subsidiary Atimonan One Energy Inc., but environmental opposition and the lack of a power supply agreement forced a delay in the project.