Philippines' Napocor to bid out 3.1 million ton coal contract: Report

The Philippines state-owned National Power Corp. (Napocor) will bid out this month some 3.13 million metric tons of coal requirements for four of its coal-fired plants, The Philippine Star reported Monday.

Napocor decided to push through with the auction after it obtained a clearance from the Procurement Policy Board (PPB) to open the auction of coal to foreign suppliers.

The PPB is the implementing body for Executive Order 40 issued by President Arroyo in April 2002 and which bars foreign suppliers from participating in any bidding for the country?s coal requirements in an effort to protect local interests.

As a result, the earlier scheduled bidding Napocor?s coal requirement had been delayed for three months after existing foreign coal suppliers of Napocor failed to comply with the EO?s stiff nationality requirement. The order has shut out the country?s existing coal suppliers like Australia, China and Indonesia and threatened security of power supply. Coal-fired plants account for more than 40 percent of the country?s total power generation mix.

Citing provisions of the General Appropriations Act of 2002, Napocor was allowed to open the bidding to foreign suppliers after declaring that there is no available locally produced supply of its desired quality or standard.

Napocor-owned and independent power producer-operated coal-fired plants are designed to run on coal, which have standard specifications that do not fit locally-mined coal. Only a small percentage is supplied by the country?s biggest coal mine, the Semirara mine in Antique.

The power firm will bid out a total of P5.6 billion (US$ = P 53.930) worth of imported coal for four coal plants namely the Napocor-owned 600-megawatt Masinloc and 110-MW Cebu plants, the 1,200-MW Sual and the 700-MW coal facilities of Mirant Energy. As part of the BOT agreement with Napocor?s private power suppliers, the state power firm will provide the fuel for coal plants operated by its IPPs.

The bidding is set on Feb. 21, 2003 for the spot requirements of Sual and Masinloc and in March for the allocation made under the government?s trade exchange program or the G to G arrangements for the Masinloc and Pagbilao plants. The April bidding will cover batches 3 and 4 involving spot requirements of Sual, Masinloc and Naga, Cebu.

The coal contracts will cover the April 2003 to May 2004 requirements of Napocor and its IPPs? coal plants.

For the Masinloc plant, three spot contracts involving five panamax shipments of coal and another spot contract for five panamax shipments under the government-to-government (G to G) arrangement will be bid out, totalling 1.3 million metric tons.

For the Sual plant, Napocor will need four spot contracts comprising five panamax shipments or equivalent to 1.3 million metric tons.

For the Pagbilao plant, one contract of three panamax shipments of low-sulfur coal will be bid out under the government arrangement with the Indonesia Coal Mining Association as well as another contract of the same volume for a performance low-sulfur coal, totalling 390,000 metric tons.

For the Naga coal plants, there are two contracts for the supply of imported and blended coal equivalent to 140,000 metric tons will be auctioned off.

These four coal-fired plants are expected to consume some 4.5 million metric tons of imported coal for the year. (*)