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Republic of the Philippines

Department of Energy
(Kagawaran ng Enerhiya)

BAGONG PILIPINAS

DEPARTMENT CIRCULAR NO. 0C &% <q-0< ~— 4
A—
GUIDELINES ON THE AWARDING OF COAL OPERATING CONTRACTS FOR
DEVELOPMENT AND PRODUCTION

WHEREAS, Section 2, Article XII of the 1987 Constitution provides that “xxx The
exploration, development, and utilization of natural resources shall be under the full
control and supervision of the State. The State may directly undertake such activities,
or it may enter into co-production, joint venture, or production-sharing agreements with
Filipino citizens, or corporations or associations at least sixty per centum of whose
capital is owned by such citizens. Such agreements may be for a period not exceeding
twenty-five years, renewable for not more than twenty-five years, and under such terms
and conditions as may be provided by law. xxx;"

WHEREAS, under Section 2 of Presidential Decree (PD) No. 972, as amended,
otherwise known as "The Coal Development Act of 1976", it is a declared policy of the
State to immediately accelerate the exploration, development, exploitation, production
and utilization of the country's coal resources;

WHEREAS, under Section 4 of PD No. 972, the Government, through the Energy
Development Board (now the Department of Energy), its successors or assigns, shall
undertake by itself the active exploration, development and production of coal
resources or it may also execute coal operating contracts as defined therein;

WHEREAS, Republic Act (RA) No. 7638, otherwise known as "The Department of
Energy (DOE) Act of 1992", as amended by Section 37 (g) of RA No. 9136, otherwise
known as the “Electric Power Industry Reform Act of 2001,” mandates the DOE to
“establish and administer programs for the exploration, transportation, marketing
distribution, utilization, conservation, stockpiling and storage of energy resources of all
forms, whether conventional or non-conventional,”

WHEREAS, Section 37(k) of RA No. 9136, further mandates the DOE to “assess the
requirements of, determine priorities for, provide direction to, and disseminate
information resulting from energy research and development programs for the optimal
development of various forms of energy production and utilization technologies;”

WHEREAS, Section 37(p) and (q) of RA No. 9136 empower the DOE to formulate such
rules and regulations and exercise such other powers as may be necessary or
incidental to attain the objectives thereof,

WHEREAS, on 13 September 2017, the DOE promulgated Department Circular No.
DC2017-09-0010 entitled “Adopting the Philippine Conventional Energy Contracting
Program (PCECP) of Awarding Coal Operating Contracts (COCs) 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”.

Energy Center, Rizal Drive cor. 34th Street, Bonifacio Global C ity, Taguig Cc ity,
Philippines 1632 Tel. No. (Trunkline)(632)8479-2900
Website: www.doe. gov.ph; E-mail: infocenter@doe.gov.ph
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Guidelines on the Awarding Coal Operating Contracts
for Development and Production Page 2 of 3

WHEREAS, aside from proclaimed coal mining reservation areas, there are other
areas in the country with existing data confirming the existence of mineable coal
reserves of commercial quantity that may already be developed and produced, thereby
reducing the period required to utilize coal resources;

WHEREAS, in consonance with the Philippine Development Plan and the Philippine
Energy Plan, the country needs to accelerate the exploration, development, and
utilization of indigenous coal resources to contribute the country’s energy security,
create jobs, and generate wealth;

WHEREAS, for the efficient, accelerated, and optimal utilization of the country’s coal
resources, there is a need to adopt methods and guidelines that will allow the direct
development and production of confirmed mineable coal reserves of commercial
quantity;

NOW, THEREFORE, in consideration of the aforementioned premises, the following
policies and guidelines are hereby adopted and promulgated:

Section 1. Scope. This Circular shall govern the awarding of COCs for the direct
development and production (DP COC) of confirmed mineable coal reserves, as
validated by the DOE.

Section 2. Various Modes in Awarding Development and Production Coal
Operating Contracts.

2.1. Applicant’s Nomination and Publication of Areas of Interest
2.2 DOE Publication of Coal Areas Open for Application

Section 3. Application Requirements. An applicant for a DP COC shall submit the
documentary requirements as provided for under Annex "A" hereof.

Section 4. Procedure. Except as otherwise provided herein, the procedures for
nomination and publication of areas of interest and for publication of areas open for
application shall follow the procedure set forth in Department Circular No. DC2017-09-
0010.

Section 5. Area Coverage. The contract area fora DP COC shail not be more than
fifteen (15) blocks of coal lands within any one coal region and must include the area
with confirmed mineable coal reserves, as validated by the DOE, supported by
established coal geology data, verified coal occurrences, and delineated coal reserves
in commercial quantities, which may no longer require exploration activities prior to
development and production.

Section 6. Contract Term. The initial term of a DP COC awarded under this Circular
shall be between ten (10) to twenty (20) years, as may be necessary to fully develop
and produce the confirmed mineable coal reserves, as validated by the DOE, and to
rehabilitate the mined-out area.
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Guidelines on the Awarding Coal Operating Contracts
for Development and Production Page 3 of 3

In the event that new reserves are delineated within the DP COC area, the term of the
contract may be extended under the same considerations as above mentioned, subject
to the limitations provided under the Constitution and applicable laws.

Section 7. Curing Period for Sole Applicant. An applicant declared as a sole
applicant during the opening of application documents, which submitted defective
documents, shall be allowed to submit corrective documentation within a period not to
exceed thirty (30) calendar days from the opening of the applications, unless otherwise
extended by the REC.

For purposes of this provision, defective documents shall refer to documents that have
been duly submitted within the prescribed period, but the content, substance, or details
fail to satisfy the required form, information, or validity period.

Section 8. Suppletory Application. Except to the extent inconsistent herewith, the
provisions of DOE Department Circular No. DC2017-09-0010 shall have suppletory
application in the implementation of this Circular.

Section 9. Repealing Clause. All issuances that are inconsistent with the provisions
of this Circular are hereby repealed or amended accordingly.

Section 10. Separability Clause. If, for any reason, any section or provision of this
Circular is declared unconstitutional or invalid, such parts not affected shall remain in
full force and effect.

Section 11. Effectivity. This Circular shall be effective immediately after its publication
in the Official Gazette or in a newspaper of general circulation. A copy of this Circular
shall be filed with the University of the Philippines Law Center — Office of the National
Administrative Register (UPLC-ONAR).

Issued on 4% _ of February 2026 at the DOE, Energy Center, Rizal Drive cor. 34"
Street, Bonifacio Global City, Taguig City, Metro Manila.

J

ed,
ON S. GARIN
ecretary

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Annex “A”

Republic of the Philippines
DEPARTMENT OF ENERGY
Energy Center, Rizal Drive corner 34" Street
Bonifacio Global City, Taguig City
Metro Manilla

GUIDELINES ON THE PHILIPPINE CONVENTIONAL ENERGY CONTRACTING
PROGRAM (PCECP) FOR APPLICATION FOR DEVELOPMENT AND
PRODUCTION COAL OPERATING CONTRACT (DP COC)

The following documentation requirements shall be included in the application:

A. Legal Documentation

1. Duly filled-out covering information sheet showing a brief summary of the
application, e.g.

COVERING INFORMATION SHEET

Telephone No.: Fax No.: Mobile Phone No.:

Email Address: Website;

Address of Applicant:

Area Applied for:

Proposed Signature Bonus:

Proposed Training Assistance:

Proposed Development Assistance Fund:

It is certified that the foregoing information are true and correct. It is understood that any
omission or misrepresentation of the required information shall be sufficient cause for the

rejection of this application.

Authorized Representative Name and Signature

2. Securities and Exchange Commission (SEC) certified true copies of the
Certificate of Registration, Articles of Incorporation and By-Laws. The
corporate purpose of the applicant shall include the exploration,
development and utilization of coal resources;

3. SEC certified true copy of the General Information Sheet (GIS) not more
than twelve (12) months old at the time of filing of application;

4. Original Copy of the Certificate of Authority from the Board of Directors of
the applicant authorizing a designated representative/s to apply,
negotiate, sign any documents, and execute the COC. The said
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Certificate of Authority shall be executed under oath by the Corporate
Secretary; and,

In case the applicant is a partnership or cooperative, it shall submit the
legal documents as specified in A.2 to A.4 above, or its equivalent, issued
or authenticated by the appropriate governing authorities.

B. Work Program Documentation

B.1) Work program

1.

Summary of proposed Five-Year Work Program and corresponding
expenditure per year for each proposed activity over the area specified,
submitted in digital and printed copies. It shall include a Gantt chart of
the program’s schedule of implementation, Development and
Production Work Commitment and Financial Commitment Matrix.

Details of the proposed Five-Year Work Program and expenditure to
be submitted in digital and printed copies, which shall include, but not
limited to the following:
a. Plan for development and production, corresponding work
commitment, and geotechnical program;
Supplemental exploration program;
Health and Safety Program;
. Social Development Program;
. Environmental Protection Program;
Emergency Preparedness and Resiliency Program; and
. Progressive Rehabilitation and Mine Decommissioning
Program.

a-moanone

Details of the methodology used for the geological and geotechnical
evaluation of the area applied for, showing the data used, coal
reserves analysis and potential resources, geohazard assessment and
proposed mitigating measures to be submitted in digital and printed
copies.

. Detailed study on economics and development concepts of the coal

reserves, including plan of development, project economics including
IRR and NPV, cash flow projections and projected market/s of the coal
to be produced to be submitted in digital and printed copies.

NOTE: Each item in the development and production work commitment matrix
must be given a stipulated cost figure, the sum of which will constitute the
minimum cost of the work program.

B.2) Technical documentation

1.

Overview of the applicants’ upstream and coal mining projects, to be
submitted in both digital and printed copies.
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2. Original copies of duly signed Curricula Vitae of the company’s
management and technical personnel, indicating their relevant
experience, educational attainment, and employment status.

3. Particulars on the experiences, achievements, and track records of the
company, related to technical and industrial undertakings, with
supporting documents such as, but not limited to certifications,
citations, table of organization, including resources, mining-related
assets etc.

C. Financial Documentation

41. For corporations existing for more than two (2) years at the time of
filing of application:

a. Original Copy of the Audited Financial Statements (FS) for the last two
(2) years from the filing date;

If the Audited FS is more than six (6) months at the time of filing,
applicants must also provide original copies of the latest Unaudited FS
duly signed by the responsible official such as the President and/or
Chief Finance Officer, which must be no more than three (3) months
old at the time of filing and must include the accompanying Notes to
the Financial Statements.

b. Original Copy of the Bank Certification to substantiate the cash
balance as of the latest unaudited FS;

c. Original Copy of the Projected Cash Flow Statement for three (3) years
covering fund sources and uses for the particular offered area, other
applied PCECP areas, renewable energy service contract
applications, existing service/operating contracts with DOE and other
existing business, if applicable; and,

d. Acertified true copy of the latest income tax return filed with the Bureau
of Internal Revenue, and duly validated with the tax payments made
thereon.

2. For newly-organized corporations existing for less than two (2) years
at the time of filing of application:

a. Original Copy of the Audited Financial Statements (FS) or unaudited
FS duly signed by the responsible official such as the President and/or
Chief Finance Officer, which must be no more than three (3) months
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old at the time of filing and must include the accompanying Notes to
the Financial Statements;

b. Original Copy of the Bank Certification to substantiate the cash
balance as of the latest unaudited FS; and

c. Original Copy of the Projected Cash Flow Statement for three (3) years
covering fund sources and uses for the particular offered area, other
applied PCECP areas, renewable energy service’ contract
applications, existing service/operating contracts with DOE and other
existing business, if applicable.

3. For Parent Company that guarantees corporations with insufficient
working capital. Financial guarantees of foreign companies to their
subsidiaries that are shareholders of the applicant shall be limited to
their equity participation in the allowable maximum forty percent (40%)
foreign capitalization.

a. Original Copy of the Parent Company's financial documents per C.1.a
and C.1.b;

b. Original Copy of duly notarized Letter of Undertaking/ Support from the
Parent Company to fund the Work Program; and,

c. General Information Sheet (GIS) of the shareholders of the applicant
availing of the Parent Company fund guarantee.

4. The minimum working capital requirement (Current Assets less
Current Liabilities) is 100% of the financial commitment for the first
contract year of the proposed work program and budget.

5. The applicant shall have available working capital for each PCECP
application separate from other applied PCECP areas, renewable
energy service contract applications and _ existing energy
service/operating contracts.

----Nothing Follows----