Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City, Metro Manila 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. ______ 
Introduced by Representative Lex Anthony Cris A. Colada 
AN ACT 
PROMOTING THE DEVELOPMENT OF THE PHILIPPINE DOWNSTREAM NATURAL 
GAS INDUSTRY, CONSOLIDATING FOR THE PURPOSE ALL LAWS RELATING TO 
THE TRANSMISSION, DISTRIBUTION AND SUPPLY OF NATURAL GAS, AND 
APPROPRIATING FUNDS THEREFOR  
EXPLANATORY NOTE 
Since 2001, the Philippines’ primary source of natural gas has been the Malampaya 
offshore gas field. Discovered in 1990, under Service Contract No. 38, Malampaya allowed the 
country to be self- sufficient in natural gas and has fueled the power and industrial sectors for two 
decades. Currently, there are five (5)1 existing natural gas-fired power plants in the country with 
a combined installed capacity of 3,732 MW.2 At its peak, Malampaya was able to supply around 
40 percent of Luzon’s energy needs. In 2021, natural gas accounted for 17.6 percent of the 
country’s total power generation mix and 24.8 percent share in Luzon.3 
The Malampaya concession is due to expire in 2024 and while the gas field will continue 
to produce significant amounts of natural gas until 2027, sustainable supply of natural gas is a 
priority program of the DOE to ensure that the natural gas-fired power plants continue to generate 
electricity for the country. Without the indigenous replacement for natural gas supply from 
Malampaya, the DOE has focused on the importation of liquefied natural gas (LNG) through the 
1 The five natural gas-fired power plants in the country are the Ilijan, Sta. Rita, San Lorenzo, Avion and San Gabriel 
power plants. Notably, the 1,200-MW Ilijan Power Plant has been on extended outage since June 2022 following the 
expiration of its Gas Purchase Agreement with Malampaya for supply of natural gas. 
2List 
of 
Existing 
Power 
Plants. 
Department 
of 
Energy 
website. 
https://www.doe.gov.ph/sites/default/files/pdf/electric_power/07_lvm_grid_and_off-grid_summary_loepp-
11302022.pdf 
32021 
Power 
Statistics. 
Department 
of 
Energy 
Website. 
https://www.doe.gov.ph/sites/default/files/pdf/energy_statistics/2021_power_statistics_03_gross_generation_pe
r_plant_type_per_grid.pdf 
February 28, 2023
1:55 pm
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development and operation of LNG receiving facilities. This strategy not only introduces a new 
industry, but also ensures the continued operation of the existing power plants being supplied by 
the Malampaya. 
Without an enabling law to guide the downstream natural gas industry, the DOE issued 
Department Circular (DC) 2017- 11-0012 or the “Philippine Downstream Natural Gas Regulation 
(PDNGR)” providing the regulatory framework governing the industry covering the guidelines for 
potential investors, creation of a liberalized market, and entry of investment through Third-Party 
Access. However, the DOE’s issuance still needs a complementary law to cover all the aspects 
of downstream natural gas industry, which includes transportation, transmission, storage and 
marketing of natural gas, in its natural or liquefied form.  
While acknowledging the fact that the natural gas industry is still a relatively young 
industry, it is vital that we introduce a proper legislative framework that would provide favorable 
conditions towards establishing a healthy natural gas industry in the country. This would then in 
turn lead towards rapid economic development while respectfully practicing sustainable 
development towards a brighter future. 
In view of the foregoing, immediate approval of this measure is earnestly sought. 
             LEX ANTHONY CRIS A. COLADA 
AAMBIS-Owa Party-list 


Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City, Metro Manila 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. ______ 
Introduced by Representative Lex Anthony Cris A. Colada 
AN ACT 
PROMOTING THE DEVELOPMENT OF THE PHILIPPINE DOWNSTREAM NATURAL 
GAS INDUSTRY, CONSOLIDATING FOR THE PURPOSE ALL LAWS RELATING TO 
THE TRANSMISSION, DISTRIBUTION AND SUPPLY OF NATURAL GAS, AND 
APPROPRIATING FUNDS THEREFOR 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled. 
CHAPTER I 
TITLE AND DECLARATION OF POLICY 
SECTION 1. Short Title. – This Act shall be known as the "Philippine Downstream 
Natural Gas Industry Development Act”.   
SEC. 2. Declaration of Policy. – It is hereby declared the policy of the State to:  
(a)
Promote natural gas as a safe, environment-friendly, efficient and cost-effective
source of energy, and an indispensable contributor to grid security, especially with the
entry of more intermittent renewable energy sources by establishing the Philippine
downstream natural gas industry (PDNGI) for the benefit of all segments of the nation’s
population and all sectors of its economy;
(b)
Promote natural gas as the energy fuel, which has tremendous potential to meet
the increasing local demand for fuel, and the development of the Philippines as a liquefied
natural gas (LNG) trading and transshipment hub within the Asia-Pacific Region. In all
cases, the State shall ensure the safe, secure, reliable, transparent, competitive and
environmentally responsible operation of the PDNGI value chain;
7329


(c) 
Provide a conducive industry environment through the issuance of policies, 
regulations, safety code, product quality and facility operational standards, and plans and 
programs geared towards the promotion and development of the PDNGI; 
(d) 
Promote the conversion of existing fossil fuel-operated machines and facilities to 
natural gas use, provided it is technically and financially feasible;  
(e) 
Promote access to and the financial viability of the PDNGI by liberalizing the entry 
of investors under a system of competition, transparency and fair trade and providing 
responsive policy support, with the end goal of attaining fair price for all stakeholders; 
(f) 
Ensure compliance with International and Philippine health, safety, security, 
environment (HSSE) standards and best practices under a system of safe, secure, high-
quality, environmentally responsible operation and services that afford protection to 
consumers; 
(g) 
Encourage the inflow of private capital through equity participation by the private 
sector in the downstream natural gas value chain including gas transmission and 
distribution utilities; 
(h) 
Ensure transparent and reasonable price of natural gas and rates for its 
importation, storage and regasification, transmission and distribution in a regime of open 
and fair competition and full public accountability that shall promote greater operational 
and economic efficiency and enhanced competitiveness of the Philippine products in the 
global market; 
(i) 
Develop the necessary trades, technical expertise and skills to support the PDNGI; 
and 
(j) 
Facilitate the development of end-uses of natural gas including the use of natural 
gas as fuel for power, commercial, industrial, residential and transport that promote fuel 
diversity and compliance with existing environmental laws.  
SEC. 3. Scope. – This Act shall provide a framework for the development of the PDNGI 
and its transition from emerging industry into mature industry status within a competitive 
natural gas market, and define the responsibilities of various government agencies and 
private entities in furtherance of this national goal. 


All activities of the Department of Energy (DOE), Energy Regulatory Commission (ERC) 
and other concerned government agencies relevant to the development and regulation of 
the PDNGI shall be in accordance with this Act.  
SEC. 4. Definition of Terms. – As used in this Act: 
(a) 
Affiliates refer to the corporate relationships of two or more persons, one of whom 
either owns or controls or is being controlled by other persons.  As used herein, “control” 
shall mean the power to direct or cause the direction of management policies as an 
inherent part of decision-making power; 
(b) 
Anti-Competitive Behavior refers to the practices and agreements in violation of 
the provisions of Republic Act No. 10667, otherwise known as the “Philippine Competition 
Act”; 
(c) 
Capacity refers to the maximum flow expressed in normal cubic meters per time 
unit or in energy unit per time unit;  
(d) 
Delivery refers to the transmission or distribution of natural gas and the supply of 
natural gas at wholesale or retail; 
(e) 
Distribution refers to the transportation of natural gas through a gas distribution 
system to end-users;  
(f) 
Distribution system refers generally to the pipeline and related facilities used to 
transport natural gas extending between the last delivery point of the transmission system 
to the last connection point to the end-user;   
(g) 
End-user refers to any person that will receive delivery of natural gas for resale or 
final use; 
(h) 
Franchise refers to the right, privilege and authority issued by Congress 
authorizing a person to engage in the transmission of natural gas or distribution of natural 
gas within a specific geographical area; 
(i) 
Gathering facilities refer to natural gas pipelines and its ancillary facilities used to 
gather gas in the field and bring it to a location for processing or for delivery at an 
interconnection with the gas transmission system. The terms "gather” and "gathering" 
shall be construed accordingly; 
(j) 
Importation refers to the act of bringing LNG into the Philippines; 
 


(k) 
Insurance refers generally to a risk-transfer mechanism that ensures full or partial 
financial compensation for the loss or damage caused by events beyond the control of 
the insured party wherein compensation is normally proportionate to the loss incurred; 
(l) 
Liquefied natural gas or LNG refers to natural gas which has been liquefied by 
cooling at a cryogenic temperature; 
(m) 
Natural gas refers to gas obtained from boreholes and wells consisting primarily of 
a mixture of methane, ethane, propane and butane with small amounts of heavier 
hydrocarbons and some impurities, consistent with the Philippine National Standards 
(PNS) or the standards developed by the International Organization for Standardization 
(ISO);  
(n) 
Natural gas distribution code refers to the code to be formulated by the DOE 
pursuant to Section 5(g) of this Act that shall set the technical performance standards for 
operating gas distribution utilities and the minimum financial standards for gas distribution 
systems; 
(o) 
Natural gas distribution system refers to the system of conventional pipelines and 
related facilities extending from the delivery points where the gas distribution system 
receives the natural gas to the point of connection in the premises of the end-user; and 
any available virtual pipeline that allows alternative modes of transportation; 
(p) 
Natural gas distribution utility refers to any person engaged in the operation of a 
natural gas distribution system providing services for general public use, which requires 
a franchise to operate a gas distribution system; 
(q) 
Natural gas sales and purchase agreement or NGSPA refers to any contract or 
agreement for the delivery and sale of indigenous or imported natural gas by and between 
sellers, suppliers, buyers and end-users; 
(r) 
Natural gas transmission code refers to the code to be developed by the DOE 
pursuant to Section 5(g) of this Act that shall set the technical performance standards for 
operating gas transmission systems and the minimum financial standards for gas 
transmission utilities; 
(s) 
Natural gas transmission system refers to the system of high-pressure pipelines, 
storage and its ancillary facilities that are used to transport natural gas from the 


interconnection with gathering facilities, other LNG-related facilities and other gas 
transmission or distribution systems; 
(t) 
Natural gas transmission utility refers to a natural or juridical person that has a 
franchise to operate or is intending to operate a gas transmission system except own-use 
pipelines; 
(u) 
Own-use permit refers to an authorization granted by the DOE to a permit holder 
or operator for the exclusive use by the operator or its affiliates in the operation of its 
natural gas facility; 
(v) 
Permit refers to an authorization issued by the DOE for the importation, 
construction, commercial operation and maintenance of natural gas facilities; 
(w) 
Permit holder or operator refers to a natural or juridical person who is granted a 
permit by the DOE to engage in the importation, construction, commercial operation and 
maintenance of natural gas facilities; 
(x) 
Person refers to a natural or juridical person, as the case may be, including the 
national and local governments of the Republic of the Philippines, its agencies and 
instrumentalities, and government-owned and controlled corporations; 
(y) 
Philippine downstream natural gas industry or PDNGI refers to the sectors of 
transmission, distribution, supply, and use of natural gas and their related activities, such 
as importation, storing, regasification, transmission and distribution of natural gas to end-
users;   
(z) 
Philippine Energy Plan or PEP refers to the overall energy program formulated and 
updated yearly by the DOE and submitted to Congress pursuant to Republic Act No. 
7638, otherwise known as the “Department of Energy Act of 1992”, as amended; 
(aa) 
Rates refer to the payment on the utilization of the capacity and use of other 
services offered by the permit holder or operator of the transmission and distribution 
pipeline; 
(bb) 
Supplier refers to any person engaged and registered with the DOE to trade on 
indigenous or imported LNG and their subsequent supply to end-users; 
(cc) 
Supply refers to the trade or sale of indigenous or imported natural gas and their 
subsequent sale to end-users; 


(dd) 
Third-party access or TPA refers to a transparent and non-discriminatory access 
and utilization by a third-party user of the excess capacity of the LNG terminal and its 
related facilities;  
(ee) 
Transmission refers to the transportation of natural gas through a natural gas 
transmission system;  
(ff) 
Virtual Pipeline refers to alternative methods of transporting natural gas to places 
where there is no pipeline network available. It is based on a modular system of 
compression or liquefaction, transport and decompression and regasification of natural 
gas, which communities, industries, gas stations and others may use.  
CHAPTER II 
POWERS AND RESPONSIBILITIES OF THE DOE AND THE ERC 
SEC. 5. Powers and Responsibilities of the DOE. – In addition to its existing powers 
and functions, the DOE shall have the overall responsibility of supervising and monitoring 
the development of the Philippine downstream natural gas industry. Towards this end, 
the DOE shall perform the following powers and functions:   
(a) 
Prepare the Natural Gas Industry Development Plan (NGIDP) within two (2) years 
from the effectivity of this Act, incorporating therein the plans submitted by public and 
private stakeholders after open discussions and consultations with them. The NGIDP 
shall consist of approved regasification, transmission and distribution development plans 
which shall be integrated into the Philippine Energy Plan (PEP), and reviewed and 
updated every three (3) years after its adoption;  
(b) 
Establish standards on gas quality, facility installation and safety of operation. For 
this purpose, a Philippine Inter-Agency Technical Committee (PIA-TC) shall be created 
by the Bureau of Philippine Standards (BPS) to be chaired by the DOE. The PIA-TC shall 
have as members the representatives of concerned government agencies and private 
industries. A Philippine Inter-Agency Health, Safety, Security and Environment Inspection 
and Monitoring Team (PIA-HSSE IMT) shall likewise be created to monitor and enforce 
compliance with established standards; 
(c) 
Evaluate applications and issue permits on the importation, exportation, receipt, 
unloading, loading, storage, regasification of liquefied natural gas; transmission, 
distribution, marketing, utilization, aggregation of natural gas; and the safe, secure, 


reliable and efficient planning, construction, operation, expansion, modification, 
maintenance, decommissioning and abandonment of the downstream natural gas 
industry infrastructure and facilities;  
(d) 
Evaluate applications for permits or authorities to operate, including a Notice to 
Proceed (NTP), a Permit to Construct, Expand, Rehabilitate and Modify (PCERM), and a 
Permit to Operate and Maintain (POM) downstream natural gas projects and facilities, 
accreditation to import, supply and transport natural gas, Acknowledgement to Import 
(ATI) LNG and Acknowledgement to Supply and Transport (AST) natural gas; 
(e) 
Review, suspend or revoke, after due notice and hearing, permits issued in 
accordance with the preceding paragraphs (c) and (d) herein, and Section 12 of this Act 
after a finding of non-compliance with the provisions of this Act, rules and regulations that 
shall be issued to implement it, and related issuances; 
(f) 
Issue a written approval on the assignment or transfer of interest on any permits 
issued in accordance with Section 50 of this Act, after finding that the assignee or 
transferee has met all the legal, technical, and financial qualifications and has committed 
itself to assume all existing obligations of the permit holder, and such assignment or 
transfer is in accordance with existing laws, rules, and regulations: Provided, That permits 
requiring the prior issuance of a legislative franchise shall not be subject to assignment 
or transfer of interest; 
(g) 
Issue, in coordination with the ERC and in consultation with other concerned 
government agencies and the PDNGI participants, the Gas Transmission and Distribution 
Codes, which shall contain the standards and best practices on safe, high-quality, 
environmentally responsible and consumer protected operation and service, competitive 
practices and reasonable rates of service; 
(h) 
Endorse requests for investigation to the Philippine Competition Commission 
(PCC) of any anti-competitive behavior in the conduct of any business under the 
downstream natural gas industry;   
(i) 
Issue directives to qualified government agencies, in their capacities as investing 
arms, to spearhead the development of the PDNGI value chain as the DOE may deem 
imperative to catalyze its development within a given timeline;  


(j) 
Determine the qualifications and detailed responsibilities of the Natural Gas 
Transmission System Operator (NGTSO) and Natural Gas Distribution Utilities (NGDUs) 
pursuant to their responsibilities provided in this Act;   
(k) 
Initiate actions against the NGTSO or NGDUs for failure to comply with the 
qualifications and detailed responsibilities specified in this Act;  
(l) 
Review and approve the natural gas supply and regasification development plan 
of the regasification terminal owner or operator, natural gas transmission development 
plan of the NGTSO, and the natural gas distribution development plans of the NGDUs, 
and integrate the same into the PEP; 
(m) 
 Require the PDNGI participants to submit the regasification, transmission and 
distribution development plans, and regular and special reports regarding the 
organization, business, conduct, practices, and management of any business entity duly 
registered as part of the downstream natural gas industry, subject to Section 20 hereof; 
and  
(n) 
Exercise such other powers and functions as may be necessary or incidental to 
attain the objectives of this Act. Subject to existing laws, rules and regulations, the DOE 
is hereby authorized to create offices and appoint personnel as may be necessary to 
efficiently and effectively implement this Act. 
SEC. 6. Powers and Responsibilities of the ERC. – In addition to its existing powers 
and functions, the ERC shall have the sole regulatory responsibility for establishing the 
rates and related terms and conditions of service for the transmission and distribution, 
regasification and supply of natural gas to the extent that such activities are regulated 
pursuant to the requirements set forth in this Act. It shall: 
(a) 
In the public interest, establish and enforce a methodology for setting transmission, 
distribution, and supply rates, taking into account all relevant considerations, including 
the efficiency or inefficiency of the regulated entities. The rates shall be to allow the 
recovery of just and reasonable costs and a reasonable return to enable the entity to 
operate viably. The ERC may, upon due notice and public consultation, adopt 
internationally accepted rate setting methodology. The rate setting methodology so 
adopted and applied shall promote efficiency and ensure a reasonable price or tariff, and 
the rates to be prescribed shall be non-discriminatory. For this purpose, the ERC is hereby 


authorized to require from all participants in the natural gas supply chain all necessary 
and appropriate records and documents relevant to the determination of just and 
reasonable fuel cost used in power generation as recoverable component of electricity 
cost to end-users;  
(b) 
Regasification services and supply services shall be subjected to rate regulation 
when there is no competing regasification operators; 
(c) 
Apply administrative procedures that will ensure the constitutional right to due 
process; 
(d) 
Before the end of April of each year, submit to the Office of the President of the 
Philippines and Congress, copy furnished the DOE, an annual report containing such 
matters or cases, which have been filed before or referred to it during the preceding year, 
the actions and proceedings undertaken thereon and its decision or resolution on each 
case. The ERC shall make copies of such report available to any interested party upon 
payment of a charge, which shall reflect the printing costs; 
(e) 
Publish in newspapers of general circulation all its cases and decisions involving 
rates;  
(f) 
Create offices and appoint personnel thereto as may be necessary to efficiently 
and effectively perform its functions as stipulated in this Act, subject to existing laws, rules 
and regulations; and 
(g) 
Exercise such other powers as may be necessary or incidental to attain the 
objectives of this Act.  
CHAPTER III 
POWERS AND RESPONSONSIBILITIES OF GOVERNMENT AGENCIES 
Sec. 7. Powers and Responsibilities of the Department of Environment and Natural 
Resources (DENR). – In addition to its functions under Executive Order No. 192, 
otherwise known as the “Reorganization Act of the Department of Environment and 
Natural Resources”, the DENR shall, together with the DOE, determine and monitor 
compliance with the environmental standards for the location, construction, improvement, 
expansion, operation, rehabilitation, repair, maintenance, decommissioning, and 
abandonment of LNG terminals, natural gas transmission systems, and all related 
equipment and facilities. 


Sec. 8. Powers and Responsibilities of the Department of Health (DOH). – In addition 
to its functions under Executive Order No. 317, Series of 1941, entitled, “Organizing the 
Department of Health and Public Welfare”, as amended, the DOH shall, together with the 
DOE, determine and monitor compliance with the health standards for the location, 
construction, improvement, expansion, operation, rehabilitation, repair, maintenance, 
decommissioning, and abandonment of LNG terminals, natural gas transmission 
systems, and all related equipment and facilities. 
Sec. 9. Powers and Responsibilities of the Department of Trade and Industry-
Bureau of Philippine Standards (DTI-BPS). – In addition to its functions under Republic 
Act No. 4109, entitled, “An Act to Convert the Division of Standards under the Bureau of 
Commerce into a Bureau of Standards, to Provide for the Standardization and/or 
Inspection of Products and Imports of the Philippines and for other Purposes”, the DTI-
BPS shall, together with the DOE, determine, develop, formulate, promulgate, and revise, 
the Philippine National Standards for natural gas transmission systems, and for natural 
gas, in its original or liquefied form, LNG terminals, all related equipment and facilities. 
SEC. 10. Powers and Responsibilities of the Philippine Competition Commission 
(PCC). – All matters concerning abuse of market power, cartelization, and any anti-
competitive or discriminatory behavior shall be subject to the quasi-judicial powers of the 
PCC as provided for under Republic Act No. 10667, otherwise known as the “Philippine 
Competition Act”. 
CHAPTER IV 
STRUCTURE, OPERATION AND REGULATIONS OF THE 
DOWNSTREAM NATURAL GAS INDUSTRY 
SEC. 11. Structure. – For purposes of this Act, the structure of the PDNGI value chain 
shall consist of an LNG terminal and its related facilities, transmission, distribution 
pipelines and their related facilities, storage and distribution-related facilities, and supply 
and transport of natural gas.  
SEC. 12. Permits. – The DOE shall have the power to issue, review, suspend and revoke 
for cause, the permits necessary for the construction, expansion, rehabilitation, 
modification, operation and maintenance of any PDNGI facility or activity. Own-use permit 
for natural gas facilities shall be allowed for the exclusive use of the operator and its 


affiliates in the operation of its facilities. The holder of an own-use permit shall still comply 
with the requirements in this Act. Transmission and distribution of natural gas shall be 
exempted from franchise requirement. 
The owner and operator of an LNG terminal shall have the option to apply for both 
permits and simultaneously perform the functions of an own-use LNG terminal permit 
holder, pursuant to Section 35 of this Act, and a third-party access (TPA) LNG terminal 
permit holder pursuant to Section 26 of this Act, to the extent of the capacity allowed by 
and during the period specified in each type of permit.  
SEC. 13. Rate Regulation. – The rate of charges and fees for the services of 
transmission or distribution pipelines and their related facilities shall, when they function 
as public utilities, be subject to the review and approval by the ERC. The rate 
methodology to be applied by the ERC shall be based on the principle of full recovery of 
prudent and reasonable costs incurred, including a reasonable return on rate base, or 
such other principles that will promote the determination of just and reasonable rates that 
is consistent with the encouragement of private investments and goal of developing a 
PDNGI infrastructure.  
SEC. 14. Compliance with Philippine Laws, Rules and Regulations. – Operators or 
permit holders of PDNGI facilities shall comply with all Philippine laws, rules and 
regulations implemented by the different agencies of the government. 
SEC 15. Compliance with Standards. – The DOE shall ensure that downstream natural 
gas products are of high quality, and natural gas facilities provide efficient service, 
observe stringent safety systems, accord attention to design details and structural 
integrity and employ operational and maintenance best practices. Regulations shall be 
consistent with applicable Philippine and internationally-accepted natural gas industry 
standards. 
SEC. 16. Confidential Information. – The government shall not use confidential or 
commercially sensitive information for purposes other than those provided herein and 
shall protect and limit the disclosure of confidential or commercially sensitive information, 
unless allowed by the operator or when required by laws, rules and regulations. 
SEC. 17. Authority to Obtain Information. – The DOE, ERC and other concerned 
government agencies may require any downstream natural gas player or permit holder, 


through a valid order and with due regard to confidential information, proprietary data and 
trade secrets, to furnish, within a reasonable period specified, all information and 
documents relating to all such matters as to the permit, rates and operation of business 
and natural gas facilities, and provide explanations on the information or document 
submitted, subject to Section 16 of this Act.  The failure of a PDNGI participant or permitee 
to provide the required information or document without valid reason shall be punishable 
under this Act. 
SEC. 18. Supply of Natural Gas. – Existing laws and rules governing the upstream 
natural gas sector shall provide the government the option to sell directly or otherwise 
authorize a service contractor to sell its share of the indigenous production. Accordingly, 
the Secretary of Energy may, when natural gas supply conditions so require, direct the 
supply of such share of indigenous production to the downstream natural gas sector.  
The operator of an LNG-related facility shall likewise ensure the accommodation of 
both indigenous and imported supply of natural gas. To this end, the DOE and the ERC 
shall provide measures to ensure that the supply of indigenous natural gas to the 
domestic downstream natural gas sector is given preferential treatment. 
The DOE shall support and ensure the implementation of any plan to upgrade an LNG 
terminal and its ancillary facilities into a hub for international trading and trans-shipment.   
Any entity engaged in the distribution of natural gas may engage in the supply of the 
same.                                                                                                                           
SEC. 19. Abandonment of Downstream Natural Gas Facility. – No holder of a permit 
for the construction, installation, operation or maintenance of a downstream natural gas 
facility shall abandon or withdraw from service any portion of said downstream natural 
gas facility or project without obtaining prior authorization from the DOE. The DOE shall, 
in coordination with the DENR, provide the guidelines and regulations for 
decommissioning and abandonment of natural gas infrastructures and facilities. 
SEC. 20. Registration and Reportorial Requirements of Natural Gas Participants, 
Facilities, Import, Export and Supply. – Holders of permits for the construction, 
installation, operation or maintenance of a downstream natural gas facility, including 
importers, exporters and supplier and transporter of natural gas or LNG, shall be 
registered with the DOE. Appropriate reportorial requirements shall likewise be required 


for proper supervision and monitoring in accordance with the implementing rules to be 
issued subsequently. 
SEC. 21. Rules of Practice. – All concerned government agencies shall issue the 
appropriate rules of procedure to serve as guideline for administrative legal proceedings.  
The Rules of Court shall apply in a suppletory manner. 
SEC. 22. Fees. – All concerned government agencies shall have the authority to 
prescribe and collect fees and charges relating to the issuance or review of permits, and 
the supervision and regulation of the PDNGI. 
CHAPTER V 
FRANCHISE REQUIREMENT 
SEC. 23. Transmission and Distribution Pipeline and Related Facility as Public 
Utility. – Operators of transmission and distribution pipelines and their related facilities 
considered as public utility shall be required to obtain a Certificate of Public Convenience 
and Necessity (CPCN) from the ERC and shall be subject to the provisions of 
Commonwealth Act. No. 146, otherwise known as the “Public Service Act”, as amended.  
SEC. 24. LNG Terminals Not a Public Utility. – The operation of an LNG terminal shall 
not be considered as a public utility operation. Hence, it shall be exempted from securing 
a legislative franchise and a Certificate of Public Convenience and Necessity.  
CHAPTER VI 
THIRD-PARTY ACCESS 
SEC. 25. Third-party Access (TPA) Obligation. – Available and uncommitted excess 
capacity of an LNG terminal, transmission and distribution pipelines and related facilities 
shall be made accessible to third-party users. The ERC shall, in coordination with the 
DOE and in consultation with the PDNGI participants, ensure the full implementation of 
the TPA and shall issue the TPA Code within one (1) year from the effectivity of this Act.  
The DOE is hereby authorized to synchronize activities to optimize and stabilize the 
utilization of existing infrastructure for the extraction, storage, and delivery of natural gas, 
such as the Malampaya natural gas facilities, which shall be subject to the third-party 
access provision in order to integrate the same with the PDNGI.  
SEC. 26. Available Capacity. – A TPA shall apply only to the available and uncommitted 
excess capacity of LNG terminal, transmission or distribution pipelines and their related 


facilities, but excluding those constructed and operated under a dedicated use agreement 
or for own use. The operators thereof shall conduct an open and sufficient consultation 
process with both existing and potential third-party users to discuss the available capacity 
and other available services. 
To ensure safe and reliable operation, the operator shall determine, subject to the 
review and recommendation by the DOE, the available and uncommitted excess capacity 
of the natural gas facilities offered to third parties. The operator shall likewise allocate 
such excess capacity based on the following criteria as they pertain to the third-party user: 
(a) Proposed contract price and terms; 
(b) Credit-worthiness; 
(c) Availability of a functioning  off-take facility;  
(d) Ability to meet fuel specification parameters of the LNG facility; and 
(e) Other relevant factors that may directly affect the allocation. 
Non-availment by any third-party user of the excess capacity so allocated and offered 
shall not be a ground for the denial or cancellation of any permit under this Act. 
SEC. 27. Third-party Access (TPA) Principles. – Adherence to the principles of 
transparency, fair competition, and safe practices is the key to the beneficial participation 
of third-party users. In line with this, the following guiding principles shall be observed:   
(a) Competition in the downstream natural gas industry must be encouraged because it 
promotes efficiency and lowers costs and prices to the benefit of end-users; 
(b) Investments in natural gas supply and infrastructure from both local and foreign 
sources, which are otherwise prevented by actions of incumbent monopolistic 
companies shall be earnestly pursued and supported; 
(c) Benefits to be derived from the diverse and sustainable use of natural gas make it an 
ideal tool of development; 
(d) Participation of third parties in the downstream natural gas industry shall be anchored 
on safe and measurable standards of service and practice; 
(e) Open and sufficient consultation between permit holders or facility operators on the 
available and excess capacity of natural gas is essential in the formulation of supply 
agreements between permit holders or facility operators and third-party users; 


(f)  Transparency in business activities shall consistently be observed to spur confidence. 
Pursuant thereto, permit holders or facility operators shall publish their available and 
uncommitted excess capacity, access terms, and conditions, and allow the review and 
inspection of their facilities and records to verify the same. 
SEC. 28. Congestion Management. – Whenever the holder of a capacity is no longer 
able to use or has not released the capacity without justifiable reason, the permit holder 
or the operator of the facility shall have the authority to release and market the same. The 
procedure and criteria of the release shall be part of the TPA Code.  The government 
agency which shall have an oversight function on this matter shall be designated in the 
TPA Code. 
SEC. 29. Approved Access Conditions and TPA Contracts. – Prior to the conduct of 
negotiations with third parties, the permit holder or the facility operator shall request the 
DOE for the review and recommendation of its access conditions in accordance with the 
TPA Code. All subsequent access contracts shall be reviewed and approved by the DOE. 
SEC 30.  Infrastructure Development Period. – To develop the TPA, the TPA Code 
shall provide an infrastructure development period and the TPA shall become obligatory 
only against the permit holder or facility operator if it can be demonstrated that there is 
already sufficient demand necessary to justify the investment and sustain the additional 
operational requirement. For this purpose, the DOE shall review and attest to the validity 
of supply and demand outlook for natural gas.  
CHAPTER VII 
STANDARDS ON FACILITIES, PRODUCT AND SAFETY PRACTICE 
SEC. 31. Standards on LNG Ships and LNG Facility. – All PDNGI facilities shall be 
predicated to be of high quality and efficient service, observe stringent safety systems, 
accord attention to design details and structural integrity and employ operational and 
maintenance best practices. Regulations shall be consistent with both applicable 
Philippine and internationally-accepted natural gas industry standards. The DOE shall 
ensure compliance with this requirement.  
SEC. 32. Standards on Product Quality. – The permit holder or operator shall maintain 
the quality of gas supply to end-users in accordance with the Philippine and internationally 
accepted standards and ensure that delivery of indigenous or imported LNG comply with 


the purification requirements to ensure that associated compounds that are unnecessary 
or damaging to the LNG regasification facility and other related natural gas facilities used 
for storage, distribution and transportation of natural gas supply are eliminated. The DOE 
shall ensure compliance with this requirement. 
SEC. 33. Standards on Safety Practice. – The permit holder or operator shall implement 
an acceptable health, safety, security and environment management system in 
accordance with applicable Philippine and internationally accepted standards. The DOE 
shall ensure compliance with this requirement. 
CHAPTER VIII 
RESPONSIBILITIES OF THE PERMIT HOLDER OR OPERATOR 
SEC. 34. Responsibilities of the Permit Holder or Operator. – A permit holder or 
operator shall have the following responsibilities: 
(a)  
Align all its goals and objectives to the accomplishment of the declared policies of 
this Act; 
(b) Be directly responsible for the construction and operation of LNG facilities by providing 
the necessary services, technology and financing, either by itself or through its duly 
authorized subcontractors, without entitlement from the Philippine government to any 
reimbursement of any expense incurred;  
(c) Comply with applicable Philippine laws and regulations relating to tax, labor and 
employment, health, safety, indigenous people’s rights, environmental protection and 
ecological preservation;  
(d) Comply with the regulatory obligations, maintenance of complete records and 
submission of all reportorial requirements and other documents as may be required by 
the DOE, ERC and other government agencies pursuant to this Act and its implementing 
rules;  
(e) Implement the natural gas project strictly adhering to the scope and limits of the permit 
and operate in accordance with Philippine and international standards;  
(f) Allow and facilitate, based on a valid order, the entry to the facility of the examiners of 
the Bureau of Internal Revenue and the Bureau of Customs and allow them full access 
to accounts, books, and records for tax and other fiscal purposes;  


(g) Allow, based on a valid order, the entry of personnel of the DOE, ERC, PIA-HSSE IMT 
and other government agencies to the facility and grant them full access to operational 
records for inspection and monitoring activities;  
(h)  Give preference to qualified local talents for hiring and local companies or agencies 
in entering into subcontracts on projects or services, which are required in the 
construction or operation of the LNG facility;  
(i)  Hold the DOE, ERC, PIA-HSSE IMT and other government agencies or other affected 
individuals free from all claims, demands or actions arising out of its failure to comply with 
laws, regulations, standards, contracts, and permits in connection with accidents, 
damages, or injuries which are beyond their control; and   
(j) Observe in the regular operational meeting of the DNG-REC and in the development, 
issuance and review of plans, protocols, standards and codes applicable to the natural 
gas project. 
CHAPTER IX 
INCENTIVES 
SEC. 35. Fiscal Incentives. – In recognition of the substantial investments needed for 
the construction of, operation and maintenance of, and conversion to natural gas facilities, 
the PDNGI value chain projects, as certified by the DOE, shall be included in the Strategic 
Investment Priorities Plan (SIPP) for the next ten (10) years from the effectivity of this Act. 
Entities engaged in said projects that are duly registered by any Investment Promotion 
Agency (IPA) shall be entitled to all the incentives under Title XIII (Tax and Duty 
Incentives) of the National Internal Revenue Code of 1997, as amended, during the 
construction period of the projects and ten (10) years of commercial operation thereafter. 
The sale of natural gas to locators inside the ecozone shall be subject to zero percent 
(0%) Value-Added Tax (VAT), pursuant to the National Internal Revenue Code of 1997, 
as amended. 
SEC. 36. Streamlined Regulatory Process. – The operation of LNG terminals, natural 
gas transmission systems, natural gas distribution systems, own-use LNG terminals, 
own-use natural gas transmission systems, and own-use natural gas distribution systems 
shall be considered as energy projects of national significance (EPNS) whose 
implementation shall not be subject to unnecessary administrative processing delays 


pursuant to Executive Order No. 30, series of 2017. To be considered an EPNS, a project 
has to be endorsed by the DOE.  
SEC. 37. Withdrawal of Exemptions. – To achieve the declared policies of this Act, 
particularly in relation to the promotion of fair and non-discriminatory treatment of public 
and private sector entities in the development of the PDNGI infrastructure, all existing tax 
exemptions applicable to persons engaged in the transmission or the distribution of 
natural gas, insofar as such exemptions relate to revenues derived from the transmission 
or the distribution of natural gas, shall be deemed revoked upon the effectivity of this Act, 
any law to the contrary notwithstanding. 
CHAPTER X 
PROMOTION OF COMPETITION 
SEC. 38. Anti-Competitive Behavior. – No gas transmission utility, gas distribution utility 
or supplier, or affiliate thereof, may engage in any anti-competitive behavior or abuse of 
market power, specifically the prohibition against monopolies and combinations in 
restraint of trade under Article 186 of the Revised Penal Code and Chapter III of the 
Philippine Competition Act.   
SEC. 39. Functional and Structural Unbundling. – All PDNGI participants shall 
functionally and structurally unbundle their business activities and rates in accordance 
with the particular sector. The ERC shall, within nine (9) months from the effectivity of this 
Act, promulgate the unbundling rules and regulations.  
SEC. 40. Complaint and Investigation Procedures. – The ERC shall, within nine (9) 
months AFTER the effectivity of this Act, promulgate rules and regulations providing for 
a complaint and investigation procedure that shall, without limitation, provide the party 
alleged to have engaged in anti-competitive or abusive activities with notice and an 
opportunity to be heard.  
SEC. 41. Affiliated Suppliers. – In order to prevent anti-competitive conduct, service 
contractors, gas transmission utilities and gas distribution utilities that own or control 
affiliates that are suppliers shall conduct their businesses, as follows: 
(a) 
No preference shall be given to the affiliate supplier over other persons in 
contracting, scheduling and balancing of available capacity, as well as curtailment, or the 
imposition of tariffs; 


(b) 
Marketing information provided to the affiliate supplier shall be provided to any 
non-affiliated supplier that is a competitor or potential competitor; 
(c) 
Employees of the affiliate supplier shall, to the maximum extent possible, function 
independently in making business decisions; and 
(d) 
Books of accounts and records of the affiliate supplier shall be maintained 
separately. 
 
 
CHAPTER XI 
FINES AND PENALTIES 
SEC. 42. Administrative Fines and Penalties. -  The following administrative fines and 
penalties shall be imposed on any industry participant who violates the provisions of this 
Act: 
(a) The permit issued by the DOE under Chapter IV, Section 12 of this Act, may be 
suspended or revoked and the DOE shall impose upon the operator a fine of Fifty 
thousand pesos (Php50,000.00) per violation of any provision under Chapter VIII, Section 
35 of this Act,  without prejudice to other appropriate administrative fines and penalties 
that other relevant government agencies may impose on the operator: Provided, That the 
schedule of fines  provided for in this Section shall be increased by the DOE every five 
(5) years. 
(b) The permit issued by the DOE under Chapter IV, Section 12, may be suspended or 
revoked upon the recommendation by the ERC and the operator may be charged by the 
ERC a fine of Five hundred thousand pesos (Php500,000.00) per violation of any 
provision under Chapter IV, Section 13 of this Act. This is without prejudice to other 
appropriate administrative fines and penalties that other relevant government agencies 
may impose against the operator. 
(c) Congress may, upon the recommendation of the DOE, ERC or other government 
agencies, as the case may be, revoke such franchise or privilege granted to the party 
found in violation of the provisions of this Act.  


SEC. 43. Criminal Fines and Penalties. – Appropriate fines and penalties under existing 
penal laws shall apply to any criminal violation associated in the implementation of this 
Act. 
CHAPTER XII 
TRANSITORY PROVISIONS 
SEC. 44. Existing Systems. – Natural gas facilities that have been constructed prior to 
the effectivity of this Act shall continue to be operated under their existing permits and 
shall comply with additional requirements as may be applicable. 
Suppliers who have entered into an NGSPA with end-users and have delivered 
indigenous or imported natural gas prior to the effectivity of this Act shall continue to 
operate under the said contracts, subject to compliance with the additional requirements 
in this Act. 
SEC. 45. Pending Application. – All applications on any activity in the natural gas value 
chain pending before the DOE upon the effectivity hereof shall be covered by this Act.  
CHAPTER XIII 
     FINAL PROVISIONS 
SEC. 46. Assignment or Transfer of Interest. – Assignment or transfer of interest of the 
permit shall be allowed only upon prior written approval by the DOE based on acceptable 
reasons and compliance by the operator, the assumption by the assignee of all 
obligations of the former permit holder, and upon meeting the minimum legal, technical, 
and financial qualifications of the transferee. 
SEC. 47. Consultation and Arbitration. – All parties shall make their best efforts to 
amicably settle any dispute arising from the performance or interpretation of any provision 
of this Act. 
     SEC. 48. Natural Gas Oversight Commission. - Upon the effectivity of this Act, a 
congressional commission, hereinafter referred to as the "Natural Gas Oversight 
Commission", is hereby constituted. The Natural Gas Oversight Commission shall be 
composed of ten (10) members, with the Chairpersons of the Committee on Energy of 
the Senate and the House of Representatives, as Co-Chairpersons, and four (4) 
additional members from each House, to be designated by the Senate President and the 
Speaker of the House of Representatives, respectively. The minority shall be entitled to 


pro rata representation but shall have at least one representative in the Natural Gas 
Oversight Commission. 
The Natural Gas Oversight Commission shall, in aid of legislation, perform the following 
functions: 
(a) Set the guidelines and overall framework to monitor the proper implementation of 
this Act; 
(b) Look into the appropriateness of creating a single independent regulatory body 
when the conditions prevailing so require; 
(c) Conduct a periodic review of this Act at least once every three (3) years; 
(d) Determine inherent weaknesses in the law and recommend necessary remedial 
administrative or legislative measures; 
(e) Approve the budget for the programs of the natural gas of Oversight Commission 
and all disbursements therefrom;  
(f) Submit periodic reports to the President of the Philippines and Congress; and 
(g) Perform such other powers and functions as may be necessary to attain its 
objectives. 
To carry out its powers and functions, expenses incurred by the Natural Gas 
Commission during the initial implementation of this Act shall be charged against the 
current appropriations of the Senate and shall thereafter be included in the annual 
General Appropriations Act. 
The Natural Gas Oversight Commission shall adopt its internal rules of procedure, 
conduct hearings and receive testimonies, reports and technical advice, invite or summon 
by subpoena ad testificandum any public official, private individual or any other person to 
testify before it, or require any person by subpoena duces tecum to produce before it such 
records, reports, documents or other materials as it may require, and generally exercise 
all the powers necessary to attain the purposes for which it is created.  
The Natural Gas Oversight Commission shall be assisted by a secretariat to be 
composed of personnel who may be seconded from the Senate and the House of 
Representatives and may retain consultants. The secretariat shall be headed by an 
executive director, who possesses a sufficient background and competence on policies 
and issues relating to the downstream natural gas industry. 


SEC. 49. Appropriations. – The amount necessary for the implementation of this Act 
shall be included in the annual General Appropriations Act.  
SEC. 50. Implementing Rules and Regulations. – The DOE shall, in consultation with 
the ERC, relevant government agencies such as the DENR, DOH, Department of 
Transportation (DOTr), Philippine Ports Authority (PPA), DTI and Department of Finance 
(DOF), the PDNGI participants, non-governmental organizations and end-users, 
promulgate rules and regulations for the effective implementation of this Act within twelve 
(12) months AFTER the effectivity of this Act.  
SEC. 51. Separability Clause. – If for any reason, any provision of this Act is declared 
unconstitutional or invalid, the other parts or provisions hereof, which are not affected 
thereby, shall continue to be in full force and effect. 
SEC. 52. Repealing Clause. – Any law, presidential decree or issuance, executive order, 
letter of instruction, rule or regulation inconsistent with the provisions of this Act is hereby 
repealed or modified accordingly.  
SEC. 53. Effectivity. – This Act shall take effect fifteen (15) days after its publication in 
the Official Gazette or in a newspaper of general circulation. 
Approved,