Gov’t eyes US, Russia, Australia for coal supply as risks mount

SINGAPORE — The Philippines is exploring alternative coal supplies from the United States (US), Russia, and Australia to reduce its 85-percent dependence on Indonesia and protect the power sector from potential supply disruptions.

Energy Secretary Sharon S. Garin said the government is also studying a domestic coal-blending facility to expand the use of locally produced coal and strengthen the country’s energy security.

“It’s not really Indonesia per se, but having a dependence of 85 percent on a certain fuel in one country, there’s a certain risk involved there,” Garin told reporters on the sidelines of the Singapore–International Energy Agency Forum on Tuesday.

The heavy reliance on Indonesian coal leaves Philippine power generators exposed to potential shipment disruptions that could affect fuel availability and drive up electricity generation costs.

While Indonesia remains a reliable trading partner, Garin said the Philippines needs more supply options to minimize these risks.

“I have to say we have a good relationship with Indonesia,” Garin said.

“Right now, we are talking to many countries also if they are interested, like the US and Russia. I think Australia is also a supplier,” she added.

Alongside efforts to secure alternative suppliers, the Department of Energy is exploring a coal-blending facility that would allow domestic coal to be mixed with imported supplies for use in existing power plants.

The plan could address fuel compatibility issues that currently limit the use of locally produced coal, potentially creating a bigger market for domestic producers while reducing reliance on imports.

Garin said possible arrangements could involve the Philippine National Oil Company-Exploration Corp. (PNOC-EC), Indonesian entities and other interested foreign companies.

Mindanao is being considered as a potential location, although discussions remain preliminary.

“So far, I haven’t received a report from PNOC-EC yet, but we’re looking at sites also in Mindanao,” she said. “And I think that gives us more energy security.”

Diversification efforts are taking shape as Indonesia reorganizes its coal export arrangements, which raised concerns on possible implications for Philippine coal imports.

However, Garin said Indonesian officials have assured the government that they will honor existing supply contracts and that the changes aim to strengthen export oversight rather than restrict shipments.

“It’s more on their internal rules kasi they want to consolidate the exports so that nobody abuses it and there’s no transfer pricing or anything of that kind,” she explained.

The Philippines has also sought assurances that the regulatory changes would not lead to higher coal prices.

“We have been assured of the supply, and we also asked them that the price could be maintained in the sense that it won’t increase because of the changes,” Garin said.

Still, she maintained that supply assurances alone are not enough to eliminate the risks of relying heavily on one country.

“For example, anything, force majeure can happen to our importation so we just need more diversification,” Garin said.

Coal remains the country’s dominant power source, accounting for 51.7 percent of total electricity generation in September, down from 56 percent.

Renewable energy accounted for 28 percent of the generation mix, while natural gas increased its share to 17 percent from 16 percent.