Napocor bids out 3-year coal supply contracts

The state-owned National Power Corp. (Napocor) has started bidding out three-year coal supply contracts with Indonesia-based coal groups.

Elisa Dayao, Napocor corporate fuel management department head, said that in an electronic bidding conducted last week, two Indonesian firms – PT Arutmin and PT Indominco Mandiri – submitted the lowest bids.

Arutmin submitted a price offer of $29.15 per MT while Indominco submitted a price offer of $25 per MT.

But Dayao said they would still negotiate with these two Indonesian firms. "We have to evaluate their bids based on our reference rate. We will meet again on April 22. We expect to come up with an agreement before the end of this month," she said.

Dayao said the bidding covered 195,000 metric tons of coal divided into three shipments per year.

The three-year supply contracts will cover the partial requirements of the 700-megawatt Pagbilao power plant in Quezon which is run by independent power producer, Mirant Phils. Inc.

The electronic bidding was participated in by other representatives of the Indonesian Coal Mining Association (ICMA), including: PT Kaltim Prima Corp., PT Gunung Bayan, PT Tanito Harum, PT Berau and PT Bahari Cakrawala Sebuku.

Another firm, PT Bukit Baiduri was disqualified due to its inability to comply with the plant’s technical specifications.

Napocor officer-in-charge Roland Quilala, said the bilateral agreement guarantees a long-term supply of coal under a system of discounted prices.

"This agreement is reflective of our commitment to get as much cost-savings from our deals as possible. We hope to continue making inroads in our efforts to keep our supply deals very competitive," he said.

The coal supply agreement resulting from the e-bidding is part of the memorandum of understanding (MOU) signed by the Philippines and Indonesia during President Arroyo’s state visit last November. Among areas of cooperation established were possible long-term supply deals of coal. – Donnabelle Gatdula