The power industry in the Philippines is reliant on several sources of energy – solar, hydropower, wind, geothermal, natural gas and fossil fuels such as diesel and coal. Over half of the power supply comes from fossil fuels, with 10 percent coming from renewable resources and 30 percent on natural gas.
With the heavy reliance on coal, it would be disastrous for the power industry if coal imports are jeopardized. According to Zenaida Monsada, the Energy Secretary, the decision of Indonesia to stop coal exports to the Philippines could have drastic effects in the energy supply in the country.
It is not because there are no other suppliers of coal. The fact is that coal from Indonesia is the cheapest due to logistics, as Indonesia is the nearest coal supplier to the Philippines.
Coal supply from Indonesia
It was reported last week that the moratorium on coal shipments to the country was extended by RetnoMarsudi, the Indonesian Foreign Minister. He said that it will be in force until the Philippine government provides a guarantee for security. The moratorium extension came as a result of the kidnapping by the Abu Sayyaf of several sailors from Indonesia who were on board a coal tugboat.
The Energy Secretary said that about 70 percent of the coal used by power generators in the Philippines is from Indonesia. In 2015, the country consumed 15 million tons of coal, which was worth about $800 million. The Energy Secretary added that they are still confirming if the ban covers all coal exports or only those brought by small sea vessels.
She also said that the department is doing an inventory of power plants and importers to see if the supply is already affected and if the replenishment schedules are followed. They are also coordinating security talks with the Department of Foreign Affairs.
Criminal activities in these neighboring countries have prompted the Philippines, Malaysia and Indonesia to agree on a joint responsibility to tackle the threats, which includes fielding air and sea patrols. It has been confirmed on June 22 that the seven Indonesian sailors, including the boat’s captain, were indeed kidnapped by the Abu Sayyaf and the sailors were being held in an undisclosed area in Sulu. There were 13 sailors in the tugboat that was already bound for Indonesia when the kidnapping occurred and only 7 were taken.
Malacañang has already informed the Indonesian officials that the Philippine government will take all steps necessary to ensure that Indonesian sea vessels bound for the Philippines would remain secure, which will include the coordination of the three neighboring countries’ naval forces. This was according to Jose Rene Almendras, the Foreign Affairs Secretary.
On the other hand, the transport ministry of Indonesia has banned Indonesia’s flagged vessels from going to the Philippines and ordered all harbor ministers not to issue permits to them.
The seas of Celebes and Sulu, wherein the kidnapping occurred, are important waterways between Malaysia, Indonesia and the Philippines. These seas are used as passage and trade routes of more than 18 million people and 55M metric tons of goods annually.
Other coal source
Meanwhile, the Energy Department has already asked operators of power plants to find alternative sources of coal, such as Russia, Vietnam and Australia. There is still enough supply but the department is thinking ahead, in case the ban is prolonged.
The Philippines also has local coal, sourced from the mines in Antique owned by Semirara Mining. However, the coal from the local mine would have to be mixed with other coal to increase its heating value.