SINGAPORE-Indonesia has assured the Philippines that it will honor its long-standing coal contracts despite the gas export cuts Indonesia has imposed on Singapore, according to Energy chief Sharon Garin.
Garin, who is attending a regional energy event here, clarified that Indonesia’s current export adjustments are due to internal restructuring and consolidation rather than a disruption to external buyers.
‘Our assurance that they have with us is that the contracts that are long standing are going to be honored,’ Garin said. ‘Their reason is that they’re just reorganizing….It’s more of their internal rules; they want consolidate that so nobody abuses it and there’s no transfer pricing or anything. So it’s more about discipline on their side rather than having any impact on the side of the buyers, especially the Filipino buyers,’ she explained.
Garin noted that the Philippines does not currently face the gas supply issues reported by Singapore. ‘So we’ve been assured of the [coal] supply. And we also asked them that a price could be maintained in a sense that it won’t be, it won’t increase, because of the changes. But we don’t have the same issue as of yet like the issue of Singapore on their gas. We only buy coal from Indonesia,’ said Garin, adding that about 95 percent of the coal used in the Philippines is brought in from Indonesia.
Meanwhile, Garin said the country is in talks with its neighbors and the private sector on the country’s plan to put up a coal-blending facility, aimed at maximizing the utilization of local coal to feed the power-hungry nation.
‘This is a possible project that we announced so that if there are any companies interested, it could be PNOC-EC [Philippine National Oil Company-Exploration Corp.] with somebody; it could be PNOC with Indonesia, but right now we’re talking to many countries also if they’re interested, like US, Russia. I think…Australia is also a supplier.
‘So we’re checking if there are countries or companies that are interested. So far, I haven’t received a report from PNOC EC yet but we’re looking at sites also in Mindanao,’ she added.
According to Garin, if the Philippines puts up a coal blending facility, then it will no longer be restricted to Indonesian coal. ‘For example, we get from local and if it’s not good enough, then we can mix it with something else.’
Some countries are getting it from Australia, she said. ‘Before, we used to get from Russia also. Other than that, there are not many providers, so our options are limited.’
She noted that the Philippines has ‘no energy security as far as coal is concerned. Because 95 percent of our coal is imported from Indonesia.’
She added, ‘Anything can happen, so what we need is to have a diversification of our risk. We need to source it from different countries, if there’s an option, or the best option is to source it in-country. Most of our coal, they say, is not good enough for our coal power plants, but there is a way to fix that. We can mix our coal with something that can make it useful for our coal power plants.’