Press Release: Opacity of Semirara Mining and Power Corporation and DOE’s weak regulatory capacity

The Extractive Industries Transparency Initiative (EITI) is an international standard of transparency which requires oil, gas and mining companies (including coal) to report what it pays to government.  It also requires government to report how much it collects from these companies. ​

The report is anchored on the principle that citizens own its country’s natural resources and have the right to know how it is managed. Data published forms a platform for discussion and debate on the direct and indirect economic contribution of extractives to the country.

The Philippines has published 2 reports on this matter (2014 and 2015). SEMIRARA Mining and Power Corporation, the largest coal producing company in the country (responsible for 94% of coal extraction), has refused to participate in the Philippine PH-EITI in both occasions. Participation of SEMIRARA is crucial to give a better picture of the coal sector.

The Multi-stakeholder group (MSG) governs PH-EITI. It is composed of reps from government, CSOs, and industry. Bantay Kita sits as a CSO rep in the MSG. In the 2015 PH-EITI Report, the MSG recommends:

• That DOE exercise its regulatory function by requiring all companies including SEMIRARA to participate in EITI; and
• That DOE disclose all contracts, including SEMIRARA’s contract.

The country will undergo a validation process by the International EITI in July. Non-participation of SEMIRARA threatens the country’s compliance status.

Public at the losing end of the law governing coal
PD 972 (which was issued in the 1970s) remains the principal law governing coal. PD 972 allows coal companies to secure the lion’s share of the revenues. They are NOT required to:

• Earmark funds for environmental protection and rehabilitation
• Pay national taxes
• AND May avail of income tax holidays and other BOI incentives.

Based on the Fiscal Year 2013 report by SEMIRARA and other sources, records show that revenues were at P16.7B, while expenses were at P13.5B, about 85% of its revenues. These included such expenses as entertainment costs at P11.8M, while taxes and licenses amounted to P48.1M. Forgone revenues in the form of income Tax Holidays is estimated at P1.5B.

This puts the public at the losing end.  BK recommends the amendment, if not abolition of PD 972, and review of other laws concerning coal.