No RE worry yet for coal producer
The Consunji group’s Semirara Mining and Power Corp.’s financial prospects hang in the balance and greatly depend on the inclination of power generator operators to avail of the Asian Development Bank’s Energy Transition Mechanism Program.
Thus far, coal plant retirement has not yet gained momentum in the Philippines, with only two retirements in the past 10 years which means SCC’s volumes could be underpinned by domestic demand.
Coal prices are expected to decline by 6.5 percent from current prices to around $130 per metric ton in 2025, and to drop by another 12.3 percent to $114.00/MT in 2026.
Renewable energy remains an aspiration for most as a report by US-based non-government organization Global Energy Monitor (GEM) revealed that the two biggest coal producers, and consumers, in the world, China and India, are even expanding their coal mine pipelines to meet demand.
In 2022, India overtook China as the world’s most populous country. Due to its massive population, renewables development is unable to keep up with surging demand, and the newly reelected Modi government has approved 93 gigawatts (GW) of new coal generation capacity expected to be built by 2032 to ensure energy security.
Despite being the global leader in building RE capacity, Beijing has remained cautious in its approach to energy transition, especially after droughts earlier this year impacted hydropower production and brought widespread blackouts. To date, China still has around 1,147 GW of coal generation capacity.
AML tasks, credit risks top concerns
In a recent survey on the impact of Bangko Sentral ng Pilipinas (BSP) regulations, banks were asked to identify their top three challenges in terms of regulatory compliance. The responses were quite surprising as they diverged from the previous year’s predominant concern over compliance with the mandatory credit to agri-agra.
Universal and commercial banks (UKBs) identify compliance with anti-money laundering regulations as their foremost compliance challenge owing to the complex and constantly evolving AML regulatory landscape, which involves large volumes of data and entails continuous system and process enhancements to carry out due diligence activities.
Foreign banks cite reportorial requirements as their primary hurdle as they try to adjust and address validation issues with the transition to automated regulatory reporting.
Rural and cooperative banks (RCBs) point to sustainable finance initiatives as their most pressing issue as they seek guidance and capacity building to craft their frameworks and policies, while thrift banks grapple the most with the implementation of the new mandatory Agriculture, Fisheries and Rural Development (AFRD) Financing Enhancement Act due to the high credit risk associated with qualified borrowers.
Digital banks indicate a mix of concerns, citing mandatory AFRD financing, AML regulations, credit risk management, and compliance with the Application Programming Interface-Extensible Markup Language (API-XML) as their key challenges.
The BSP’s regulatory framework — such as regulations on Information Technology (IT) risk management, financial consumer protection, stress testing, reportorial requirements, and operational risk management — is another challenge in terms of compliance.