DOE awards 5 coal operating contracts

The Department of Energy (DOE) has awarded five coal operating contracts (COC) to four local companies for the exploration and development of the coal resources in Southern Luzon, Cebu Province, and Mindanao.

The award of the new contracts brings to 11 the total number of COCs that have been signed this year.

Energy Secretary Raphael P.M. Lotilla said this development serves as a major boost to the country’s energy independence program through acceleration of the exploration and development of the indigenous energy resources, particularly local coal.

The DOE awarded to SKI Construction Group Inc., formerly known as Summa Kumagai, Inc., two exploration contracts for coal areas in Barangay Alpako, Naga and in Danao City, both in Cebu Province.

Another COC was given to Rock Energy International Corp. to explore coal in three blocks with an area of 3,000 hectares, located in Siocon, Zamboanga del Norte.

Bonanza Energy Resources, Inc., meanwhile, will explore the coal-bearing areas located within eight coal blocks in the provinces of Sultan Kudarat, South Cotobato and Sarangani.

Lotilla has expressed optimism that the renewed interest in the exploration and development of coal resources will yield positive results to further increase the production of local coal.

The energy chief said while demand for coal in the local market is steadily increasing, majority of the supply comes from abroad.

"We hope that these exploration activities will give us good results to lessen our dependence on imported fuel and yield forex savings," he said. This will also help create job opportunities in the countryside, he said.

According to Lotilla, a Review Committee composed of the representatives from the Energy Management Bureau of the DENR, the DOE and other agencies will conduct series of consultations with the local government units, indigenous peoples, non-government organizations including church groups to present the project and get feedback from these sectors to ensure the safety and protection of the communities and the environment.

Those already awarded coal operating contracts were MG Mining and Energy Corp. for South Cotabato in Mindanao and in Southern Cebu areas; Forum Exploration Inc. for Balamban-Naga, Cebu and Dalaguete, Cebu coal fields; Philex Mining Corp. for Diplahan-Buug, Zamboanga Sibugay and Samaju Corp. for Batan Island in Rapu-rapu, Albay.

Estimates show that the country’s total coal reserves stand at 343.4 million metric tons (MMT). Local coal production hit an all time high of 2.72 MMT last year, up by 34.3 percent the previous year of 2.03 MMT. In 2002, production was registered at 1.66 MMT.

The market supply outlook in 2005 from production and importation of coal is 8.03 MMT, of which some 2.55 MMT will come from local coal production.

Power and other industrial sectors are the bulk users of coal, with the power sector traditionally accounting about 80 percent.