Semirara challenges DOE over mining investment climate
Semirara Mining and Power Corp. (SMPC) has challenged the Department of Energy's (DOE) industrial policy, warning that its coal bidding rules could discourage mining investments and undermine the government's efforts to attract investors.
In a statement on Monday, the Consunji-led company questioned the government's decision to impose restrictions on established mining operators while allowing bidders without proven mining experience to compete based primarily on financial offers.
“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,” SMPC said.
SMPC argued that the bidding framework could send the wrong signal to investors by placing existing operators at a disadvantage despite their investments, operational experience and contributions to the economy.
Under the contested rules, SMPC said it would be required to surrender its mining assets, including trucks and heavy equipment, to the government as a condition for submitting a bid.
Meanwhile, another known bidder, which the company claimed has no established mining experience, would not face the same restriction.
SMPC said the DOE has instead adopted the highest financial bid as the sole ranking factor in selecting the operator that would take over the coal mine by July 2027.
The company questioned the shift in the government's selection criteria, noting that technical mining competence had been a key consideration earlier this year before the bidding framework changed in the middle of the year.
It also claimed that no prequalification process was conducted, while routine bidding bulletins and responses to questions were not provided.
Apart from investor confidence, SMPC warned that the bidding rules could undermine the government's revenue objectives if the winning bidder lacks the technical capability to sustain coal production.
The company said an inexperienced operator could fail to produce coal, resulting in zero royalty payments to the government despite submitting the highest financial offer.
It also questioned the absence of provisions imposing penalties on the winning bidder should coal production fall to zero.
“Why kill the golden goose for zero gain?” SMPC asked.
Over the past 29 years, SMPC said it has paid P70.5 billion in taxes and contributes approximately P600 million annually to its host municipality of Caluya to support education, healthcare and livelihood programs.
Its operations have also supported more than 4,000 jobs, which the company said could be threatened by the contested bidding framework.
SMPC also cited its contribution to affordable electricity, noting that coal-fired power plants recorded an average generation price of P4.05 per kilowatt-hour in the Luzon-Visayas grid in September, compared with P14 per kWh for liquefied natural gas-fired plants.