Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. _____ 
___________________________________________________________________________ 
Introduced by Representative Michael L. Romero 
___________________________________________________________________________ 
EXPLANATORY NOTE 
Natural gas will play a vital role in the country’s energy mix and in the 
government’s goal to achieve energy independence, the Department of Energy 
(DOE), The Natural Gas Industry has played a major role in the rise of numerous 
countries within the international arena. In fact, within an Increasingly 
competitive global economy, the natural gas industry has fueled the rapid rise 
of the Gross Domestic Product (GDP) of many countries by enabling their 
energy intensive industries to have access to an affordable, abundant and 
accessible energy source to be utilized long-term. DOE urged investors to look 
into opportunities in the liquefied natural gas (LNG) sector in the country. 
With Malampaya’s depletion estimated to occur in the next few years, there 
is an urgent need to attract more investments in the downstream LNG industry. 
aside from adding natural gas sources in the energy mix, DOE also 
envisions the country to be the LNG hub in Southeast Asia. 
 natural gas is the fuel of choice and the fuel of the future for the 
Philippines as more firms are investing in the sector. It just goes to show that 
natural gas will be a fuel of (the) future for our electric power needs. This is a 
signal to the market that natural gas and LNG will be here to stay in our energy 
mix. mode to achieve energy independence. According to DOE, natural gas
accounts for 21.9 percent of the country’s power generation mix in 2019.
September 9, 2022
11:02 am
4615


 
The country targets to increase natural gas share to energy mix to 33 
percent by 2040, while renewable energy will share 32 percent, coal at 34 
percent, and oil at 1 percent.  
Various government policies have been initiated to adopt and spearhead 
the development of the country's downstream natural gas industry. Policies 
which designated the Department of Energy (DOE) as the primary agency that 
would push for the development of the country's natural gas industry as well as 
the issuance of the DOE interim rules and regulations governing the 
transmission, distribution and supply sub-sectors of the natural gas industry. 
 
The state acknowledges 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.  
 
Thus, the early passage of this bill is earnestly requested.  
 
MICHAEL L. ROMERO 
 
 
 
 
 
 
 
 
 
 
 
 


Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. _____ 
____________________________________________________________________________ 
Introduced by Representative Michael L. Romero 
____________________________________________________________________________ 
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 PROVIDING 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"
SECTION 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; 
4615


 
(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; 
(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 O 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. 
SECTION 3. SCOPE AND LIMITATION — 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. 
 
SECTION 4. DEFINITION OF TERMS. As used in this Act: 
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; 
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"; 
Capacity refers to the maximum flow expressed in normal 
cubic meters per time unit Of in energy unit per time unit; 
Delivery refers to the transmission or distribution of natural 
gas and the supply of natural gas at wholesale Of retail; 
Distribution refers to the transportation of natural gas 
through a gas distribution system to end-users; 


 
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; 
End-user refers to any person that will receive delivery of natural 
gas for resale or final use; 
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; 
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; 
Importation refers to the act of bringing LNG into the 
Philippines; 
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; 
Liquefied natural gas or LNG refers to natural gas which has 
been liquefied by cooling at a cryogenic temperature; 
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); 
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; 
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; 
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; 
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; 
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; 
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; 
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; 
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; 
 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; 
 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; 
 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 Of 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 
SECTION 5. POWERS AND FUNCTIONS 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 1MT) 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 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 implement 
this Act efficiently and effectively. 


 
SECTION 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: 
 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 Of 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; 


 
 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 
perform its functions efficiently and effectively 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 
SECTION 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. 
SECTION 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. 
 
SECTION 
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. 
 
SECTION  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 
SECTION 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. 
SECTION 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. 
 
SECTION 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, Of 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. 
 
SECTION 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. 
SECTION 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. 
SECTION 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. 


 
SECTION 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. 
SECTION 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. 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. 
SECTION 
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. 
SECTION 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. 
SECTION 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. 
SECTION 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 
SECTION 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 legislative franchise and a Certificate of Public 
Convenience and Necessity (CPCN) from the ERC. 
Operators of virtual pipelines and their related facilities, which are likewise 
considered as public utilities, shall no longer be required a legislative 
franchise. However, such operators shall be requited to secure a CPCN from 
the concerned agency having appropriate jurisdiction over them, in accordance 
with the provisions of Commonwealth Act. No. 146, otherwise known as the 
"Public Service Act", as amended. 
SECTION 24. PHILIPPINE OWNERSHIP REQUIREMENT. — As required 
under Article XII, Section 1 1 of the Constitution, no franchise, certificate, or 
any other form of authorization of a public utility shall be granted except to 


 
citizens of the Philippines or to corporations or associations organized under 
the laws of the Philippines, at least sixty percent (60%) of whose capital is 
owned by such citizens. 
SECTION 25. 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 
SECTION 26. 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. 
SECTION 27. 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: 
Proposed contract price and terms; 
(b) 
Credit-worthiness; 
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. 
SECTION 28. 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) (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. 
 
SECTION 29. 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. 
SECTION 30. 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. 
SECTION 31. 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 
SECTION 32. 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. 
SECTION 33. 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. 
 
SECTION 34. 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 
SECTION 35. 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 1MT 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 
SECTION 36. 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 Incentives) of the National Internal Revenue Code of 1997, as amended. 
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. 
SECTION 37. 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. 
SECTION 38. 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 
SECTION 39. ANTI-COMPETITIVE BEHAVIOR. — No gas transmission 
utility, gas distribution utility or supplier, or affiliate thereof, may engage in 
any anti-competitive behavior of 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 Ill of the Philippine 
Competition Act. 
SECTION 40. 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. 
SECTION 41. 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. 
SECTION 42. 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 nonaffiliated 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 
PENALTIES AND SANCTIONS 
SECTION 43. 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 Of 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. 
SECTION 44. 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 XXII 
TRANSITORY PROVISIONS 
SECTION 45. EXISTING SYSTEMS. — Natural gas facilities that have been 
constructed prior to the effectivity of this Act shall continue to be operated 


 
under the 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. 
SECTION 46. 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 XXIII 
FINAL PROVISIONS 
SECTION 47. ASSIGNMENT OR TRANSFER OF INTEREST. — Assignment 
Of 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. 
SECTION 48. 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. 
SECTION 49. 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 
Combustion 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, Of 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. 


 
SECTION 50. APPROPRIATIONS. — The amount necessary for the 
implementation of this Act shall be included in the annual General 
Appropriations Act. 
SECTION 51. 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. 
 
SECTION 52. SEPARABIFFTY CLAUSE. If for any reason, any provision of 
this Act is declared unconstitutional of invalid, the other parts or provisions 
hereof, which are not affected thereby, shall continue to be in full force and 
effect. 
SECTION 53. 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. 
 
SECTION 54. EFFECTIVITY. — This Act shall take effect fifteen (15) days after 
its publication in the Official Gazette or in a newspaper of general circulation. 
 
Approved,