SMPC questions highest-bid rule in Semirara coal mine auction

Consunji-led Semirara Mining and Power Corporation (SMPC) has criticized what it described as a sudden change in the bidding rules for the Semirara Island coal mines, saying the new guidelines prioritize the highest financial offer over technical capability and mining experience.

In a statement, SMPC said the Department of Energy's (DOE) decision to award the coal mining contract solely on the basis of the highest financial bid “violates known bidding protocols.”

The company questioned why the DOE abandoned technical capability as a key consideration in selecting the winning bidder without providing an explanation.

“The highest bidder with zero mining experience will most likely produce zero coal output and zero government share,” SMPC said.

GMA News Online has sought comment from the DOE on SMPC's allegations but has yet to receive a response as of posting time.

SMPC also raised concerns over the winning bidder's ability to sustain coal production once it takes over the mining operations in July next year.

The company said it remains unclear what penalties would be imposed if the winning bidder fails to produce coal by then.

“It also must know how to pump out sea water that is one skyscraper deep per hour to get to the coal, something SMPC learned through years of trial and error,” the company said.

SMPC warned that the winning bidder would have only a few months to procure mining equipment and haul trucks, as well as recruit and train around 4,000 workers, to ensure uninterrupted coal production.

The company said it has invested more than P55 billion in its mining operations, deploying hundreds of pieces of heavy equipment to extract coal deposits located about 350 meters below sea level.

Its operations also involve massive haul trucks equipped with tires nearly nine feet tall, underscoring the scale and technical requirements of coal mining on the island.

Asset surrender requirement

SMPC earlier cried foul over a bidding requirement that would compel the company to surrender its mining assets to the government if it participates in the auction.

The company cited Presidential Decree No. 972, or the Coal Development Act of 1976, in asserting its ownership of the equipment used in its mining operations.

SMPC also accused the DOE of failing to observe established bidding procedures and address concerns raised by the incumbent operator.

“There were no bid bulletins, no pre-qualification to screen the unqualified, no official reply to questions raised, no reply to all the letters sent by the current mine operator, no model contract, no minutes, and complete secrecy on how the award would be reached,” the company said.

According to SMPC, the DOE canceled the initial bidding round in September without resolving these issues.

The DOE and the Department of Environment and Natural Resources (DENR) subsequently issued a joint administrative order (JAO) establishing the framework for a second bidding round.

Under the new rules, SMPC said it would be allowed to participate only if it agreed to turn over its mining assets to the DOE.

The company maintained that the bidding requirements raise questions about the fairness of the auction and the ability of the eventual winner to sustain coal production on Semirara Island.— MCG, GMA News

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