DOE Issues New Rules on Coal Development and Production Contracts

Last February 16, 2026, the Department of Energy (DOE)  issued Department Circular No. DC2026-02-0004, which establishes a regulatory framework for awarding Coal Operating Contracts for Development and Production (DP COC). This Circular introduces a streamlined framework for areas with confirmed mineable coal reserves that are validated by the DOE. By allowing direct development and production without undergoing a full exploration phase, it seeks to reduce project timelines and respond more efficiently  in view of the country’s growing energy demands. The approach aligns with both the Philippine Development Plan and the Philippine Energy Plan, particularly in the  advancement of energy security, employment generation, and optimal resource utilization.

DP COCs may be awarded either through applicant’s nomination and publication of areas of interest or DOE publication of coal areas open for application. Contract areas are limited to a maximum of fifteen (15) blocks within a coal region and must cover deposits with established commercial viability. Contracts are granted for an initial term of ten (10) to twenty (20) years, covering development, production, and site rehabilitation, with possible extensions subject to applicable legal limitations.

Applications under the Philippine Conventional Energy Contracting Program (PCECP) require comprehensive legal, work program , and financial submissions. Legal documentation must establish corporate existence and authority, including a covering information sheet, SEC-certified true copies of the Certificate of Registration, Articles of Incorporation (AOI), and By-Laws, and a General Information Sheet (GIS) issued within the last twelve (12) months. Applicants must also submit an original Certificate of Authority from the Board of Directors, executed under oath by the Corporate Secretary, which  designates authorized representatives for contract negotiation and execution.

Work program documentation includes the 1) work program and 2) technical documentation. Under the work program, applicants are required to provide a Five-Year Work Program supported by a Gantt chart and a Financial Commitment Matrix allocating costs to each activity. These must be accompanied by detailed plans on health, safety, environmental protection, and progressive mine decommissioning,  including a geotechnical evaluation and an economic study that reflect the project’s internal rate of return and net present value. Moreover, technical documentation is the overview of the applicants’ upstream and coal mining projects. It includes original copies of duly signed Curricula Vitae of the company’s management and technical personnel   as well as the company’s experiences, achievements, and track records related to technical and industrial undertakings.Financial requirements vary depending on the applicant’s corporate age but consistently emphasize liquidity and capital adequacy. Corporations operating for more than two (2) years must submit audited financial statements (AFS) for the preceding two (2) years and their latest income tax returns. Newly-organized corporations may submit signed either the audited or unaudited financial statements not more than three (3) months old. All applicants must provide a bank certification of cash balances and a three-year projected cash flow statement.  Further, the DOE requires a minimum working capital equivalent to one hundred percent (100%) of the financial commitment for the first contract year. While parent company guarantees are allowed for applicants with insufficient working capital, guarantees from foreign entities are limited to their forty percent (40%) allowable equity participation. Finally, each application must also demonstrate working capital that is separate from other energy service contracts or pending applications.