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on

és . je (Kagawaran ng Enerhiya)

*

: Republic of the Philippines
—) 9 DEPARTMENT OF ENERGY

DEPARTMENT CIRCULAR NO. DC2017-_04- 0010 yp

ADOPTING THE PHILIPPINE CONVENTIONAL ENERGY CONTRACTING
PROGRAM (PCECP) OF AWARDING COAL OPERATING CONTRACTS (COC)
AND CREATING THE REVIEW AND EVALUATION COMMITTEE (REC)
REPEALING FOR THIS PURPOSE DEPARTMENT CIRCULAR NO. DC2014-02-
0005 AND DEPARTMENT ORDER NO. DO2014-08-0017

WHEREAS, Republic Act No. 7638, as amended, otherwise known as "The
Department of Energy (DOE) Act of 1992", mandates the Department of Energy
(DOE) to prepare, integrate, coordinate, supervise and control all plans, programs,
projects and activities of the Government relative to energy exploration,
development, utilization, distribution, and conservation;

WHEREAS, Section 4 of Presidential Decree No. 972, as amended, otherwise
known as "The Coal Development Act of 1976", allow the Philippine Government (the
"Government") to promote and undertake the exploration, development and
production of the country's indigenous coal resources through Coal Operating
Contracts (COCs) with contractors:

WHEREAS, the DOE issued Department Circular No. DC2014-02-0005 (the "5th
Philippine Energy Contracting Round (PECR5) Guidelines") to reiterate and
acknowledge the need to continue adopting a transparent and competitive system for
awarding COCs for the exploration, development, and production of the country's
coal resources;

WHEREAS, the DOE issued Department Order No. DO2014-08-0017, as amended,
otherwise known as “Prescribing Guidelines and Procedures for the Amendment of
Contract Area in Coal Operating Contract (COCs) and Petroleum Service Contracts
(SCs)”, to provide legal basis for existing COC and SC contractors to carry out the
exploration and development of petroleum and coal resources in other frontier areas
not covered and offered in any energy contracting round;

WHEREAS, the DOE is continuously adopting new mechanisms and strategies to
effectively carry out its plans and programs as mandated under PD 972, as
amended, including its implementing rules and regulations;

WHEREAS, Section 6 of PD 972, as amended, otherwise known as “The Coal
Development Act of 1976”, allows the Government to promote and offer prospective
coal areas for award through bidding or negotiation;

WHEREAS, the DOE desires to implement a simpler and faster public contracting
program by nomination thru publication to facilitate the acceptance of applications for
COC from interested applicants at any given time which is deemed to be more
responsive if the development of the country’s coal resources is to be intensified;

Energy Center, Rizal Drive, Bonifacio Global City, Taguig City, Philippines 1632
Tel. No. (Trunkline) (632) 479-2900;
Website: http://www.doe.gov.ph; E-mail: info@@doe.gov.ph

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WHEREAS, the DOE intends to effectively administer, supervise and regulate the
implementation of awarded COCs to ensure the sustainable development of the
country’s coal resources;

NOW, THEREFORE, in consideration of the aforementioned premises, the following
policies and procedures in the selection, evaluation, awarding and administration of
COCs are hereby adopted and promulgated for compliance by all concerned:

Section 1. Scope. This Circular shall govern the selection process in the awarding of
COCs and the creation of the Review and Evaluation Committee (REC).

Section 2. Policies in the Conduct of Selection Process in Awarding COCs. The
selection process in the awarding of COCs to qualified applicants shall be conducted
in a transparent, open, competitive and expeditious manner.

Section 3. Various Modes in Awarding Coal Operating Contracts
3.1. Applicant/s Nomination and Publication of Area/s of Interest

Applicant/s for COC shall formally nominate the area/s of their interest for
the REC consideration in accordance with the procedures set under Item
| of Annex “A”.

3.2. DOE Publication of Coal Areas Open for Application

The DOE thru the Review and Evaluation Committee (REC) may publish
identified coal area/s not covered by any application for nomination for
the purpose of inviting interested applicant/s to file application.

Section 4. Creation of the Review and Evaluation Committee (REC). The REC is
hereby constituted to carry out the responsibilities set forth in this Circular and shall
be composed of the following officials:

Chairperson - Undersecretary-in-charge of the Energy Resource
Development Bureau

Vice Chairman - Assistant Secretary

Members Director of the ERDB
Director of the Financial Services (FS)
Director of the Legal Services
Director of the Information Technology and Management
Services (ITMS)

Section 5. REC Technical Working Group (TWG) and Secretariat. The REC TWG
and Secretariat shall assist the REC in all activities related to Philippine Conventional
Energy Contracting Program (PCECP) and in the coordination and administration,
supervision and regulation of COCs, and shall be composed of the following:
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Head

Assistant Director of the ERDB

TWG Members = Chief, Coal and Nuclear Minerals Division (CNMD)

Chief, Conventional Energy Resource Compliance Division
(CERCD)

Chief, Upstream Conventional Energy Legal Services
Division (UCELSD)

Chief, Information Services Division (ISD)

Chief, Information and Data Management Division (IDMD)

The DOE Luzon Field Office (LFO), DOE Visayas Field
Office (VFO) and DOE Mindanao Field Office (MFO) shall
assist the TWG in the performance of its functions in their
respective area/s of jurisdiction.

Secretariat Supervising Science Research Specialist and Staff
Members CNMD Exploration and Geosciences Research Section and

Section 6.

6.1

6.2

6.3

6.4

6.5

6.6

6.7

Development and Production Section
Responsibilities of the REC

Accept, evaluate and approve or reject the application for nomination of
area/s of interest for publication;

Examine, evaluate, and review the legal, technical, and financial
capabilities of the applicant/s and their application/s as provided for in PD
972, and existing laws, rules, and regulations:

Recommend to the Secretary the award and issuance of COC in favor of
the highest-ranked applicant for multiple applications, or legally,
technically, and financially qualified in case of sole applicant:

Address any questions and inquiries that may be raised by the Secretary
in connection with the COCs endorsed for award and issuance:

Resolve issues in relation to the legal, technical and financial capabilities
of applicants, including motions for reconsideration:

Cause the publication of coal area/s open for COC applications under
Section 3.2 of this Circular;

Institute and implement a system of coordination and administration,
supervision and regulation during the implementation and operation of
the COCs such as, but not limited to, the following:

a) Extension, amendment, cancellation / termination and
relinquishment of COCs;

b) Transfer and assignment of COCs;

c) Disposal of assets; and,
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d) Recommend allocation and utilization of all assistance funds
generated from the awarded COCs in accordance with the existing
rules and regulations.

6.8 Other functions of REC that the Secretary may delegate and additional
tasks that may be deemed necessary to carry out its responsibilities and
objectives.

Section 7. Qualifications of COC Applicant. Applicant must be a corporation or
partnership with at least sixty percent (60%) of its capitalization is owned by Filipinos
duly registered with the Securities and Exchange Commission (SEC), or cooperative,
organized or authorized for the purpose of engaging in coal exploration and
development.

In relation thereto, the applicant shall comply with Section 2-A of Commonwealth Act
(CA) No. 108 or the “Anti-Dummy Law” and Foreign Investment Act.

Section 8. Evaluation, Selection and Awarding Procedures for the Various
Modes of Selection Process. The evaluation, selection and awarding procedures
for the various modes of selection process in awarding COCs shall be provided for
under Annex “A” of this Circular entitled “Guidelines for Philippine Conventional
Energy Contracting Program (PCECP) for Coal Operating Contract Application”.

Section 9. Criteria for Selecting the Highest Ranked Applicant. A COC applicant
under any of the modes mentioned in Section 3 of this Circular shall submit complete
documents as provided for under Annex “A” pertaining to the following selection
criteria, to wit:

i. Legal qualification

ii. Work Program

iii. Technical qualification
iv. Financial qualification

In case of two or more applicants over the same area, the highest ranked applicant
who meets the legal, technical and financial requirements shall be selected.

Section 10. Motions for Reconsideration and Appeals. The REC and/or the
Secretary, for sufficient and valid cause, may at any given time reject any or all
application/s submitted. Any motion for reconsideration or appeal from the decision of
the REC and/or the Secretary shall comply with applicable provisions of Department
Circular No. DC2002-07-004 or the "Rules of Practice and Procedure before the
Department of Energy”.

Section 11. Separability Clause. If for any reason, any section or provision of this
Circular and its Guidelines is declared unconstitutional or invalid, such parts not
affected shall remain in full force and effect.

Section 12. Repealing Clause. Department Circular No. DC2014-02-0005 and the
Department Order No. DO2014-08-0017 and provisions of all other DOE issuances
that are inconsistent with the provisions of this Circular are hereby repealed.
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Section 13. Effectivity. This Circular shall take into effect fifteen (15) days following
its publication in at least two (2) broadsheet of general circulation and shall remain in
effect until otherwise revoked.

Issued this _ Ss of September, 2017 in Bonifacio Global City, Taguig City, Metro
Manila. SEP 43 201
u Iy/ °
86 &tusi
Secretary

Rapublic of the ibd
Fe _ an OF ene
OE-AGC-17004243
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PUBLICATION: The Manila Times
The Philippine Star
06 October 2017

ACKNOWLEDGEMENT: U.P. LAW CENTER
12 October 2017