Auctions for coal deals set for December

Business World Online
Posted on October 25, 2011 10:29:31 PM


SALE of coal exploration contracts, initially targeted for this month, have been set for December as the Energy department is still finalizing the list of areas, an official told reporters on Tuesday.
“For the coal bidding, we have moved it to December as we are still awaiting confirmation on some areas to be offered,” Energy Undersecretary Jose M. Layug, Jr. said.
He said there were five areas on the initial list, adding that the department wanted to add more sites.
“So far, we have only five areas but it’s [sic] not yet final. We are looking at additional five more, but we need a final go signal from the Department of Environment and Natural Resources so there will be no overlap,” said Mr. Layug.
The department had earlier said there are several potential sites in Mindanao that may be included.
Investors have raised concern over the open pit mining ban in South Cotabato and, lately, the communist rebel attack on a major nickel mine site in Surigao del Norte earlier this month.
Data from the Energy department show there were 30 active coal operating contracts as of September last year.
Official data also show that the power sector consumes about 75.2% of the country’s coal, with the balance going to industrial and cement manufacturing.
In addition to producing its own coal, the Philippines also imports coal to be used in some power plants.
The coal contracting round forms part of the 4th Philippine Energy Contracting round that was launched last June with 15 areas for oil and gas exploration, 10 of them in Palawan. The government had said it expected around $7.5 billion in investments for oil and gas contracts alone.
In the last coal contracting round in 2009, the Energy department awarded more than 10 coal contracts with investments of around P580 million.
The department earlier postponed the contracting round due to questions raised by the Commission on Audit (CoA) on the taxation of government awarded service contracts.
CoA said in its 2009 audit on the Energy department that the government was shortchanged by about P53.1 billion in corporate income tax from the Malampaya natural gas project for the years 2003-2009, since the tax was actually deducted from the 60% government share in net sales of this venture as a form of incentive for investors. -- ENJD