Committee set up for petroleum, coal contract transparency

Business World Online 
Posted on March 05, 2014 09:47:03 PM 

IN ANTICIPATION of the next Philippine Energy Contracting Rounds (PECR), slated to take place this year, the Energy department has ordered the creation of a committee to ensure a more transparent and competitive system of granting the rights to explore and develop the country’s coal and petroleum resources. 
The department, in a circular posted on its Web site, has outlined procedures to govern the system of awarding petroleum service contracts and coal operating contracts. 
"This circular shall apply to the determination of the legal, technical, and financial qualifications of applicants, the evaluation of their applications, and the award of corresponding service and operating contracts for petroleum and coal resources," the document, dated Feb. 24, stated. 
The circular creates a Review and Evaluation Committee (REC) to consist of the undersecretary in charge of the Energy Resource Development Bureau, his assistant, and the directors of the ERDB, legal services, and financial services. 
As part of its responsibilities, the REC is tasked to identify the prospective coal and petroleum areas within the country’s territory. 
"In this regard, the REC shall notify the local government units of the offered areas within their territorial jurisdiction, prior to the inclusion to the PECR," the circular read. 
The committee will also have the obligation to examine, evaluate and review the technical, financial, and legal capabilities of project applicants and, after which, recommend to the Secretary the award of contracts. 
It is also the REC’s responsibility to "[r]esolve issues in relation to the legal, technical and financial capabilities of applicants, including motions for reconsideration." 
The circular also detailed the procedure for awarding petroleum service contracts and coal operating contracts. 
Since the REC will determine the prospective areas, it should also prepare the PECR documents with description of available data. Such data should include the location map and technical description of areas being offered and schedule of activities for the PECR. 
A pre-submission conference for PECR applications should be scheduled to discuss relevant rules and entertain clarifications from prospective applicants. Submission of applications should be based on the existing guidelines. 
The evaluation should be based on legal qualification using a pass or fail criterion; work program (40%); technical qualification (20%); and financial qualification (40%). 
"The highest ranked applicant who meets the... requirements shall be selected," the circular read. The legal department and ERDB should prepare the final contract that will be awarded. 
Applicants, within seven days from the receipt of the award notice, should pay necessary fees and charges.
State-owned PNOC Exploration Corp. (PNOC-EC) has been given a reserved option to acquire a maximum of 10% interest in a contract involving one or more Filipino participants and 15% for a contract with no Filipino participant. 
"All rights, privileges, benefits, costs, expenses, obligations and liabilities of PNOC-EC shall be in proportion to its participating interest in the proposed service contract," the circular noted. 
Previous contractors with cancelled to terminated contracts due to outstanding work and financial obligations are no longer allowed to join the PECR. 
The circular will take effect fifteen days following its publication in two newspapers. Under the PECR 4 -- which took place last year -- the Energy department offered 38 coal and 15 petroleum blocks for exploration and development. 
The auction received 69 bids for 28 coal contracts and 20 offers for 11 petroleum contracts, but the department only awarded 11 coal and four petroleum contracts. -- Claire-Ann Marie C. Feliciano source