The Energy Department on Monday asked power plant operators to look for other sources of coal such as Australia, Vietnam and Russia, after Indonesia stopped its vessels from sailing to the Philippines.
Indonesia prohibited its flag-bearing vessels from sailing to the Philippines, following the recent kidnapping of Indonesian nationals in Philippine waters.
“We have other sources—Russia, Australia, Vietnam. They can source from there but the quality requirement is different and power plants would need to negotiate for their respective new contracts. Hopefully, we will not reach that scenario,” Energy Secretary Zenaida Monsada said.
The Philippines imported 16.4 million metric tons or 95 percent of its coal requirements from Indonesia in 2015. About 80 percent of the volume was used for power generation.
The country imported the remaining 5 percent from Vietnam, Russia and Australia.
Monsada, however, said coal sourced from other countries were more expensive due to logistics cost.
“Right now we are not seeing any impact [of the ban on coal supply],” Monsada said.
“It’s not yet a cause for alarm. We have an inventory and if we look at what happened before [in April when a previous ban was in effect], it will have no impact on us,” she said.
Monsada downplayed the possibility of a blackout, because of insufficient coal supply for local coal-fired power plants.
“Not in the immediate future, because the plants have 20- to 30-day inventory for power plants. There’s a required inventory and continuous importation,” she said.
Monsada said the department was still waiting for the schedules from the power plants if any of the coal deliveries were deferred as a result of the ban.
The energy chief said some plants could also utilize local coal from Semirara Mining Corp.’s mines in Antique, but this should be blended with other coal with higher heating value.
She said it was not immediately clear whether power rates would be affected by the Indonesian ban as most of the power plants had contracts “with constant rates” with suppliers.
Monsada said the Defense and Foreign Affairs Departments were now in talks for the security concerns raised by Indonesia. Indonesia earlier said the ban would remain in effect until the Philippines addressed the security issue.
Most of the country’s coal power plants rely on Indonesian coal, which is cheaper than other sources because of proximity to the Philippines.
Monsada said last week the Philippines could not afford to lose coal supply from Indonesia.
“At the moment, no. Because our dependence on Indonesia for our coal power plants is huge,” she said.
Indonesia in April also temporarily suspended some coal exports to the Philippines due to security concerns.
Semirara Mining Corp., the country’s biggest coal mining firm, also supplies coal to power plants.
“We can always shift exportable coal to local. Some power plants cannot use Semirara coal or at reduced capacity. Currently, we can channel all production of one million tons a month locally,” Semirara Mining chairman Isidro Consunji said.
Aboitiz Power Corp. executive vice president Luis Miguel Aboitiz said the company was still using Indonesian coal.