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The Department of Energy (DOE) has scrapped its planned 2026 coal auction covering three major concession areas, giving the agency more time to overhaul its rules while extending uncertainty over the future of the country’s largest coal mine.
In an advisory dated Sept. 15, the DOE terminated the bidding round for development and production coal operating contracts after prospective bidders and other stakeholders raised concerns during pre-submission conferences.
The agency cited persistent water seepage and other developments affecting Semirara Island in Antique, as well as legal considerations, saying these issues warranted a reassessment of the criteria for awarding coal contracts.
The auction, launched in February and initially postponed in April, was supposed to cover 18 predetermined blocks in three areas. These include 10 blocks on Semirara Island, three blocks in Amulung and Iguig in Cagayan, and five blocks in Benito Soliven, Naguilian and Cauayan in Isabela.
Significant Auction
The DOE said it would develop a “fair, equitable, transparent and comprehensive” framework for bidding in areas with confirmed or established coal reserves.
“Such a framework shall, consistent with the national interest, give due consideration to securing appropriate and measurable economic returns and benefits commensurate with the value and characteristics of the offered area,” the agency said.
Despite the cancellation, Energy Secretary Sharon Garin said the government still intends to hold the bidding before the end of the year.
“We’re still far from the bidding, but the bidding will happen within the year,” Garin said.
The planned auction carries particular significance for Semirara Mining and Power Corp. (SMPC), which has operated the Semirara coal mine for about five decades under Coal Operating Contract No. 5. Its contract expires in July 2027.
SMPC produces more than 90 percent of the Philippines’ domestic coal output, making the outcome of the auction important not only to the Consunji-led company but also to the country’s domestic fuel supply.
New Rules Under Review
The DOE is considering a national-interest evaluation framework that would make the financial offer the sole ranking factor among bidders that pass the initial eligibility requirements.
Under the proposed two-stage system, applicants would first undergo a pass-or-fail assessment of their legal standing, technical capability and financial capacity. Those that qualify would then be ranked according to their financial offers, with the highest bid taking the top position.
The approach differs from earlier statements by Garin that the auction would focus on technical qualifications rather than financial bids.
SMPC has submitted written comments and recommendations opposing some provisions of the proposed framework. Among its requests is to restore technical capability and the quality of a bidder’s work program as weighted factors in the final ranking, rather than treating them only as minimum eligibility requirements.
The company warned that a pass-or-fail system could “treat all passing bidders as technically equivalent.”
SMPC also said the system could fail to distinguish companies with stronger technical capabilities from those that merely meet the minimum requirements.
Investment Challenge
The uncertainty comes as SMPC faces major decisions over its investment in Semirara.
SMPC has cut its capital spending by 68 percent this year and placed major equipment purchases on hold. The company has also laid off more than 400 employees, with additional job cuts potentially possible as uncertainty over the mine’s future continues.
SMPC chairman and CEO Isidro Consunji estimated that producing 16 million metric tons of coal annually would require at least ₱55 billion in capital spending for equipment alone.
That investment requirement could influence the interest of potential bidders, particularly because the Semirara mine is estimated to have about eight years of remaining life.
The mine also faces technical challenges, including persistent water seepage into active extraction areas. The issue was among the developments cited by the DOE in deciding to revisit its evaluation criteria.
The agency has yet to establish a revised timetable for the auction following its cancellation.
Market Uncertainty
The delay has heightened questions about how SMPC and potential competitors will prepare for the transition before the existing contract expires.
“The market essentially has difficulty determining what SMPC looks like beyond July 2027: whether it continues operating Semirara under a new contract, operates under potentially different economic terms, or eventually loses the mining operation,” Toby Allan Arce, head of sales trading at Globalinks Securities and Stocks Inc., said.
Arce said prolonged uncertainty could affect SMPC’s capital-allocation decisions because mining operations require continuous investment.
At the same time, a delayed bidding process could give SMPC an advantage as the incumbent operator because a new contract holder would need time to conduct due diligence, prepare a mine plan and arrange a transition.
“The closer the bidding process gets to the contract expiration, the more difficult it becomes for a new operator to conduct due diligence, prepare a mine plan and ensure a seamless transition,” Arce said.
The government’s challenge now is to finalize an auction framework that addresses the technical, legal, and economic issues surrounding the three coal areas while allowing enough time for a potential new operator to prepare for the future of Semirara.
Source:
https://business.inquirer.net/611567/semirara-uncertainties-deepen-as-doe-scraps-2026-coal-auction
https://www.philstar.com/business/2026/09/18/2556991/doe-aborts-2026-semirara-coal-auction
https://mb.com.ph/2026/09/17/doe-cancels-2026-coal-auction-as-semirara-bidding-collapses