Napocor to bid out coal requirements

State-owned National Power Corp. (Napocor) has firmed up a bilateral agreement with Indonesia for a long-term supply of coal.

Napocor corporate fuel management head Elisa Dayao said they will bid out on April 4 two supply contracts for the delivery of coal totalling 1.17 million metric tons (MT) among members of an Indonesia consortium.

Dayao said each of the two supply contracts consists of an annual requirement of 195,000 MT 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 Philippines Inc.

"We expect the coal supply agreements to be finalized by the end of April. The contract will commence in July this year," he said.

The Napocor official said the bidding will be done through the electronic mode. It is expected to be participated in by representatives of the Indonesian Coal Mining Association (ICMA).

The members of the consortium include: PT Tambang Batubara Bukit Asam, PT Intitirta Primasakit, PT Bukit Baiduri Enterprise, PT Berau Coal, PT Arutmin Indonesia, PT Kaltim Prima Coal and PT Sari Andara Persada, PT Tanito Harum, PT Gunung Bayan and PT Indominco.

These Indonesian coal firms, she said, will compete with each other via Napocor’s internally developed electronic bidding system.

Napocor Officer-In-Charge Roland Quilala, for his part, 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 deal 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.

Napocor is also in the process of finalizing a counter trade agreement with Philippine Associated Smelting and Refining Corp. (PASAR) and China Minmetals, the largest general trading company in China.

Under the MOU signed last October in Beijing, PASAR will supply copper cathodes to Minmetals in exchange for coal.

Based on the agreement, PASAR will then supply the coal sourced from Minmetals to Napocor in return for electricity supply from the state-owned power firm. – Donnabelle Gatdula