NINETEENTH CONGRESS OF THE 
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REPUBLIC OF THE PHILIPPINES 
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Third Regular Session 
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I,,,. 
. ‘V'f t.J
of II,,.
24 AUG 20 P3 :37
SENATE
Senate Bill No. t do
Prepared and submitted jointly by the Committees on Energy; Ways and Means; and 
Finance with Senators Sherwin T. Gatchalian, Imee R. Marcos, Joel Villanueva, Raffy 
T. Tulfo, Francis "Chiz"G. Escudero, and Pia S. Cayetano as authors thereof
AN ACT
PROMOTING THE DEVELOPMENT OF THE PHILIPPINE 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:
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CHAPTER I
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TITLE AND DECLARATION OF POLICY
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Section 1. 777/e-This Act shall be known as the "Philippine Natural Gas Industry
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Development Act".
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Sec. 2. Declaration of Policy. - It is hereby declared the policy of the State to:
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(a) Promote natural gas as a safe, efficient, and cost-effective source of
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energy and an indispensable contributor to grid security, especially with
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the entry of more intermittent renewable energy sources by establishing
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the Philippine Downstream Natural Gas Industry (PDNGI) for the benefit
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of all segments of the nation's population and all sectors of the economy;
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(b) Promote natural gas as an energy fuel, with the potential to meet the
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increasing local demand for fuel, and to develop the Philippines as a
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Liquefied Natural Gas (LNG) trading and transshipment hub within the
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Asia-Pacific Region. In all cases, the State shall ensure the safe, secure,
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reliable, transparent, competitive and environmentally responsible
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operation of the PDNGI value chain;
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(c) Provide a conducive industry environment for the promotion and 
development of the PDNGI through the issuance of regulatory policies, 
the localized codes and standards for products, facilities and its 
operations based on the Philippine National Standards (PNS), and plans 
and programs;
(d) Promote the conversion of existing fossil fuel-operated equipment and 
facilities to natural gas use: Provided, That the conversion is technically 
and financially feasible;
(e) Promote and hasten the exploration and development of indigenous 
natural gas resources and facilities, and prioritize the use of indigenous 
natural gas over imported natural gas to help attain greater energy 
security;
(f) Promote the financial viability of the PDNGI by liberalizing the entry of 
investors under a system of competition, transparency and fair trade, 
and by providing responsive policy support, with the end goal of 
attaining fair prices for all stakeholders;
(g) Promote the role of natural gas as an additional energy source and a 
transition fuel to variable renewable energy by creating a legal and 
regulatory framework that would govern the promotion and 
development of the PDNGI;
(h) Ensure compliance with the PDNGI product and facility standards on 
Health, Safety, Security, and Environment (HSSE) and other applicable 
rules and regulations under a system of safe, secure, high-quality, and 
environmentally responsible operations and services that afford 
protection to consumers;
(i) Encourage the inflow of private capital through equity participation by 
the private sector in the development of the PDNGI;
(j) Ensure transparent and reasonable pricing of natural gas and rates for 
its storage, regasification, transmission, and distribution in a regime of 
open and fair competition, with full public accountability that shall 
promote greater operational and economic efficiency and enhanced 
competitiveness in the global market;
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(k) Develop the necessaty technical expertise and skills of personnel in
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government agencies and the private sector to support the PDNGI;
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(I) Promote aggregation as a nationwide or grid-wide strategy in order to
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mitigate end-users' exposure to risks associated with natural gas
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availability and price voiatility; and
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(m) Facilitate the development of power and non-power end-uses of
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natural gas which includes commercial, industrial, residential, and
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transport applications that promote fuel diversity: Provided, That the
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power rates from the utilization of natural gas shall be subject to
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Republic Act (RA) No. 9136, otherwise known as the "Electric Power
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Industry Reform Act of 2001 "(EPIRA).
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Sec. 3. Scope. - This Act shall provide a framework for the development of the
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PDNGI, and its transition from an emerging industry into a mature industry within a
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competitive natural gas market. It shall also define the responsibilities of various
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government agencies and private entities in furtherance of this national goal.
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It shall apply to the permitting of siting, construction, operation and
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maintenance, expansion, modification, rehabilitation, decommissioning, and
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abandonment of PDNGI Facilities for Own-Use or Third-Party Access (TPA). It shall
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likewise apply to the accreditation of Participants in the trade of natural gas, including
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but not limited to the purchase, supply, aggregation, bunkering, reselling, and export
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of natural gas, and any other activities related to the PDNGI.
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All activities of the Department of Energy (DOE), Energy Regulatory
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Commission (ERC), and other concerned government agencies relevant to the
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development and regulation of the PDNGI shall be in accordance with this Act.
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Sec. 4. Definition of Terms. - For the purposes of this Act, the following terms
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shall be defined as follows:
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(a) Affiliate refers to any corporation that directly or indirectly, through one
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or more intermediaries, controls, is controlled by, or is under common
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control of another corporation;


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{b) Aggregation refers to the activity of procuring indigenous natural gas, 
combining it with imported LNG, and selling the aggregated gas to gas 
buyers in the Philippines or abroad, by a Participant known as an 
Aggregator. The required minimum percentage of indigenous natural 
gas for aggregation shall be determined by the DOE based on production 
levels of indigenous natural gas sources and other relevant factors;
(c) Aggregated Gas'cefevs to indigenous natural gas that has been combined 
with or supplemented by imported LNG, pursuant to the required 
minimum percentage of indigenous natural gas as provided in Section 4 
(b) of this Act. Gas that is a blend or combination of purely imported 
LNG, without any portion of the gas coming from indigenous natural gas 
sources, shall not be considered Aggregated Gas;
(d) Anti-Competitive Behavior refers to any behavior and/or agreements in 
violation of the provisions of RA No. 10667, otherwise known as the 
"Philippine Competition Act^CPCA);
(e) Bunkering to the activity of selling natural gas for use of domestic 
or foreign marine vessels by a Participant known as a bunker trader;
(f) Capacity to the handling design of a system used in the context of 
its functionality and expressed in a specific measurement, such as 
volume or flow per time unit or designated measurement unit;
(g) Conventionai Transportation System refers to a network of fixed facilities 
made up, among others, of wellheads, compressor stations, pipelines, 
and metering for the purpose of delivering natural gas. This includes 
both the PDNG Transmission and Distribution Systems;
(h) Decommissioning and Abandonment refers to the activity consisting of 
the removal or condemnation of the entire PDNGI Facility installation or 
a component thereof that has reached the end of its productive life and, 
if applicable, the subsequent restoration of the Facility site to its previous 
condition;
(i) Delivery refers to the transmission or distribution of natural gas and the 
supply of natural gas at wholesale or retail;


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(j) Distribution refers to the transportation of natural gas through a PDNG 
distribution system;
(k) End-user refers to any person who will receive the delivery of natural 
gas for final use;
(l) Indigenous Naturai Gas refers to natural gas produced from fields within 
the territorial jurisdiction of the Republic of the Philippines;
(m) Liquefied Naturai Gas or LNGrefersX.0 natural gas that has been liquefied 
by cooling at a cryogenic temperature;
(n) LNG Storage and Regasification Terminai refers to all component facilities 
used to receive, unload, load, store, and regasify LNG. It shall include, 
among others, jetty and unloading/loading arms, cryogenic and non- 
cryogenic pipelines, storage tanks and pumps, boil-off gas compressors 
and condensers, vaporizers, control facilities, metering, send-out and 
other relevant components;
(o) Natural gas refers to gas consisting primarily of a mixture of methane, 
ethane, propane, and butane, with small amounts of heavier 
hydrocarbons and some impurities, consistent with PNS or other 
applicable internationally accepted industry standards;
(p) Natural Gas Sales and Purchase Agreement or NGSPA refers to any 
contract or agreement for the delivery and sale of natural gas by and 
between sellers, suppliers, and buyers;
(q) Offshore refers to areas situated at sea, some distance from the shore;
(r) Own-Use refers to the exclusive use of the entire capacity of PDNGI 
Facilities by a Permit Holder or its affiliates;
(s) Own-Use Perm it refers to an authorization issued by the DOE to an Own-
Use Permit Holder;
(t) Participant refers to a natural or juridical person who engages in the 
trade of natural gas either as a supplier, aggregator, bunker trader, or 
reseller;
(u) Permit refers to an authorization issued by the DOE for the siting, 
construction, operation and maintenance, expansion, modification, 
rehabilitation, decommissioning, and abandonment of PDNGI Facilities


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for Own-Use or TPA. It shall likewise apply to the accreditation of 
Participants in the trade of natural gas, including but not limited to the 
purchase, supply, aggregation, bunkering, reselling, and export of 
natural gas, and any other activities related to the PDNGI;
(v) PermitHolderre^QYS to a natural or juridical person who owns the PDNGI 
Facility and is granted a permit by the DOE to engage in the siting, 
construction, operation and maintenance, expansion, modification, 
rehabilitation, decommissioning, and abandonment of PDNGI Facilities 
for Own-Use or TPA;
(w) Philippine Downstream Natural Gas Development Plan or PDNG Dev 
Plan refers to the comprehensive plan for ensuring a safe, secure, and 
reliable supply of natural gas and establishing the efficient operations of 
the PDNGI Facilities and proper management of natural gas demand 
through appropriate government programs and policies. It shall include 
the various natural gas supply plans, PLSR Terminal Dev Plan, PDNG 
Transmission Dev Plan, and PDNG Distribution Dev Plan. This plan shall 
be incorporated in the PEP;
(x) Philippine Downstream Natural Gas Distribution Code or PDNG 
Distribution Code refers to the code formulated by the DOE, which shall 
set the performance standards for operating a conventional and virtual 
distribution system;
(y) Philippine Downstream Natural Gas Distribution Development Plan or 
PDNG Distribution Dev Plan refers to a comprehensive plan prepared and 
submitted to the DOE by the Permit Holders of all PDNG Distribution 
Systems and Virtual Transportation Systems containing, among others, 
information on their locations, construction, operation and maintenance, 
expansion, modification, rehabilitation, decommissioning, and 
abandonment, whichever is applicable. The plan shall likewise include all 
studies, programs, and policies for the promotion and development of 
the distribution sector;
(z) Philippine Downstream Natural Gas Distribution System or PDNG 
Distribution System refers to a Conventional and Virtual Transportation
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System starting at the receipt of natural gas from the source of 
indigenous natural gas, LNG Storage and Regasification Terminal, or 
PDNG Transmission System up to the receiving facility of the end-user;
(aa) Philippine Downstream Natural Gas Industry Facility or PDNGI Facility 
refers to the LNG Storage and Regasification Terminal, PDNG 
Transmission System, and PDNG Distribution System, and other related 
facilities;
(bb) Philippine Downstream Natural Gas Industry or PDNGI refers to all 
Permit Holders involved in the siting, construction, operation and 
maintenance, expansion, modification, rehabilitation, 
decommissioning, and abandonment of PDNGI Facilities. It shall 
likewise refer to Participants involved in activities pertaining to the 
purchase, supply, aggregation, bunkering, reselling, and export of 
natural gas, and any other activities related to the PDNGI;
(cc) Philippine Downstream Natural Gas Transmission Code or PDNG 
Transmission Code refers to the code formulated by the DOE, which 
shall set the performance standards for operating a conventional 
transmission system;
(dd) Philippine Downstream Natural Gas Transmission Development Plan or 
PDNG-Transmission Dev Plan refers to a comprehensive plan prepared 
and submitted to the DOE by the Permit Holders of all PDNG 
Transmission Systems containing, among others, information on their 
locations, construction, operation and maintenance, improvement, 
expansion, modification, rehabilitation, decommissioning, and 
abandonment, whichever is applicable. The plan shall likewise include 
all studies, programs, and policies for the promotion and development 
of the distribution sector;
(ee) Philippine Downstream Natural Gas Transmission System or PDNG 
Transmission System refers to a conventional transportation system 
starting at the receipt of natural gas from the source of indigenous 
natural gas and/or from an LNG Storage and Regasification Terminal 
up to the receiving facility of the PDNG Distribution System;
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(ff) Philippine Energy Plan or PEP refers to the overall energy program 
formulated and updated yearly by the DOE and submitted to Congress 
pursuant to RA No. 7638, otherwise known as the "Department of 
Energy Act of 1992as amended;
(gg) Philippine LNG Storage and Regasification Terminai Code or PLSR 
Terminal Code refers to the code formulated by the DOE, which shall 
set the performance standards for operating an LNG Storage and 
Regasification Terminal;
(hh) Philippine LNG Storage and Regasification Terminal Development Plan 
refers to a comprehensive plan prepared and submitted to the DOE by 
the Permit Holder of all LNG storage and regasification terminals 
containing, among others, information on their locations, construction, 
operation and maintenance, expansion, modification, rehabilitation, 
decommissioning, and abandonment, whichever is applicable. The plan 
shall likewise include all studies, programs, and policies for the 
promotion and development of the regasification sector;
(ii) Reselling refers to the activity of procuring natural gas from a supplier 
or aggregator and reselling it to gas buyers by a Participant known as 
a reseller;
(jj) Supply refers to the activity of procuring or producing and selling 
indigenous or imported natural gas to gas buyers in the Philippines or 
abroad by a Participant known as a supplier;
(kk) Third-party Access or TPA refers to a transparent and non- 
discriminatory access and utilization by a third-party user of the 
capacity of PDNGI Facilities;
(II) Third-Party Access Code ox TPA Code refers to the code formulated by 
the DOE, which shall set the performance standards for TPA;
(mm) TPA Permit refers to an authorization issued by the DOE to a Permit 
Holder that allows TPA;
(nn) Transmission refers to the transportation of natural gas through a PDNG 
Transmission System;
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(oo) Virtual Transportation System refers to any alternative methods of
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transporting natural gas other than through the conventional
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transportation system, such as the use of land vehicles or sea vessels,
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with or without an on-site modular regasification unit; and
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(pp) Waterfront refers to facilities that are designated for the handling,
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storing, stowing, loading, discharging, or transporting of dangerous
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cargo, also called a "waterfront LNG plant".
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CHAPTER II
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POWERS AND RESPONSIBILITIES OF GOVERNMENT AGENCIES
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Sec. 5. Powers and Responsibilities of the Department of Energy (DOE). - In
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addition to its existing powers and functions, the DOE shall have the overall
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responsibility for supervising and monitoring the PDNGI and developing the strategies
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to implement the state policies declared under this Act. Toward this end, the DOE shall
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exercise the following powers and functions:
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(a) Prepare the PDNG Dev Plan, incorporating the plans submitted by public and
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private stakeholders, after open discussions and consultations with them,
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within two (2) years from the effectivity of this Act. The PDNG Dev Plan shall
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be reviewed and updated every three (3) years after its adoption;
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(b) Establish standards on gas quality, facility and code of practice for the PDNGI
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in coordination with relevant government agencies. For this purpose, a
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Technical Committee (TC) shall be created to develop and promulgate the
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applicable PNS for the PDNGI. The TC shall be co-chaired by the DOE and
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the Department of Trade and Industry-Bureau of Philippine Standards (DTI-
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BPS).
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The TC members shall be composed of representatives from the following
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sectors:
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(i) Academe;
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(ii) Trade/Industry;
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(iii) Consumer;
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(iv) Professional Associations;
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(v) Research Institutions;
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(vi) Government Agencies;
(vii) Testing Institutions; and 
(viii) Other relevant sectors.
(c) Enforce PDNGI compliance with the standards, in coordination with relevant 
government agencies, through the issuance of technical regulations 
implementing the standards, review of reports, and conduct of onsite 
inspections.
An Inter-Agency Health, Safety, Security and Environment Inspection and 
Monitoring Team (lA-HSSE IMT) shall be created to monitor and enforce 
compliance with established standards, co-chaired by the DOE and the 
Department of Environment and Natural Resources (DENR).
The lA-HSSE IMT members shall be composed of representatives from the 
following government agencies:
(i) Maritime Industry Authority (MARINA);
(ii) Philippine Coast Guard (PCG);
(iii) Department of Labor and Employment (DOLE);
(iv) Bureau of Fire Protection (BFP);
(v) Department of Health (DOH); and
(vi) Other relevant government agencies.
(d) Approve or issue:
(i) 
Permits for the construction, operation and maintenance, expansion, 
modification, rehabilitation, decommissioning, and abandonment of 
PDNGI Facilities;
(ii) 
Accreditation of Participants;
(iii) 
Acknowledgment of natural gas importation and exportation 
notifications; and
(iv) 
Other endorsements or issuances in furtherance of the development 
of the PDNGI.
The procedure for processing and issuance of all permits and other 
endorsements or issuances pursuant to this Act shall be governed by RA No. 
11234, otherwise known as the "Energy Virtual One Stop Shop Act" (EVOSS
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Act). The EVOSS Steering Committee shall streamline the permitting process 
for the PDNGI and shall continue its mandate under the EVOSS Act;
(e) Review, suspend, or revoke permits issued after a finding of non-compliance 
with the provisions of this Act, its Implementing Rules and Regulations 
(IRR), and related issuances;
(f) Issue a written approval for the assignment or transfer of permits after 
determining that the assignee or transferee has met all the legal, technical, 
and financial qualifications, has committed itself to assume all existing 
obligations of the Permit Holder, and that such assignment or transfer is in 
accordance with existing laws, rules, and regulations;
(g) Within two (2) years from the effectivity of the IRR of this Act, in consultation 
with other concerned government agencies and the PDNGI stakeholders, 
issue the PDNG Transmission Code, PDNG Distribution Code, the PLSR 
Terminal Code, and the TPA Code;
(h) Endorse to the Philippine Competition Commission (PCC) for investigation 
any reported or observed anti-competitive behavior in the PDNGI;
(i) Issue directives to relevant government agencies, in their capacities as 
investing arms, to catalyze the development of the PDNGI;
(j) Require Permit Holders and Participants to submit regular and special 
reports, and to provide real-time monitoring access to the operation and 
maintenance activities of PDNGI Facilities;
(k) Publish on the DOE website the list of Permit Holders and Participants along 
with the status of their projects;
(l) In times of national emergency, when the public interest so requires, the 
President, through the DOE, upon the recommendation of the National 
Economic and Development Authority (NEDA), may, during the emergency 
and under reasonable terms, temporarily take over or direct the operation 
of any person or entity engaged in the PDNGI;
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(m) Create offices and appoint personnel as may be necessary to efficiently
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and effectively implement this Act, subject to existing laws, rules and
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regulations;
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(n) Develop and establish such other plans and policies as may be consistent
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with and in furtherance of the state policies declared under this Act; and
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(o) Exercise such other powers and functions as may be necessary or incidental
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to attain the objectives of this Act.
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Sec. 6. Powers and Responsibilities of the Energy Regulatory Commission
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(ERC). - The powers of the ERC shall be in accordance with its regulatory function
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under Chapter IV of the EPIRA and Section 11 of RA No. 11646, otherwise known as
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the "Microgrid Systems Act", and such other powers as may be delegated to it by the
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DOE pursuant to this Act.
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The ERC shall provide the methodology for the determination and full recovery
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of reasonable costs and other regulatory support for the generation of electricity
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sourced from indigenous natural gas. The ERC shall likewise take into account the
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government share and other revenues in the production of the indigenous natural gas
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sold to power plants.
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It shall perform its functions in a manner that supports the state policies
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declared under this Act and is consistent with the plans and strategies developed by
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the DOE pursuant to this Act.
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It shall create offices and appoint personnel as may be necessary to efficiently
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and effectively perform its functions in regulating power generated from natural gas,
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subject to existing laws, rules and regulations.
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Sec. 7. Powers and Responsibilities of the Department of Environment and
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Natural Resources (DENR). - In addition to its functions under Executive Order No.
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192, otherwise known as the "Reorganization Act of the Department of Environment
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and Natural Resources", the DENR, together with the DOE and the PCG, shall
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determine and monitor compliance with the environmental standards for the siting,
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construction, operation and maintenance, expansion, rehabilitation, decommissioning,
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and abandonment of PDNGI Facilities, pursuant to existing environmental laws, such
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as RA No. 8749, otherwise known as the "Philippine Clean Air Act of 1999", as
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amended, RA No. 7586, otherwise known as the "National Integrated Protected
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Areas System Act of 1992", as amended by RA No. 11038, otherwise known as the
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"Expanded National Integrated Protected Areas System Act of 2018", Republic Act
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No. 6657, or the "Comprehensive Agrarian Reform Law of 1988", as amended, and
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other existing environmental laws, rules, and regulations: Provided, That, within six
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(6) months from the effectivity of this Act, the DENR shall establish national standards
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for methane emissions and other pollutants from natural gas industries not otherwise
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regulated by existing laws.
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Sec. 8. Powers and Responsibilities of the Philippine Coast Guard (PCG). - In
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addition to its functions under RA No. 9993, otherwise known as the "Philippine Coast
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Guard Law of 2009", the PCG, together with the DENR, shall determine and monitor
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compliance with the marine environmental protection standards for the offshore and
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waterfront siting, construction, operation and maintenance, expansion, modification,
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rehabilitation, decommissioning, and abandonment of PDNGI Facilities.
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Sec. 9. Powers and Responsibilities of the Department of Transportation (DOTr)
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through the Maritime Industry Authority (MARINA). - In addition to its functions under
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Presidential Decree No. 474, otherwise known as the "Maritime Industry Decree of
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1974", the MARINA shall have general jurisdiction over the development, promotion,
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and regulation of all enterprises engaged in the business of designing, constructing,
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manufacturing, acquiring, operating, supplying, repairing, and maintaining vessels, or
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component parts thereof, including LNG carriers. The MARINA shall also provide for
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the effective supervision, regulation, and rationalization of the organizational
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management, ownership and operations of all water transport utilities and other
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maritime enterprises.
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Sec 10. Powers and Responsibilities of the DOTr and its Attached Agencies. -
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In addition to its functions under Executive Order No. 125, series of 1987, otherwise
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known as the "Reorganization Act of the Ministry of Transportation and
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Communications", as amended, and other applicable laws, the DOTr or its attached
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agencies, such as the Land Transportation Office, Land Transportation Franchising
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and Regulatory Board, and MARINA, in coordination with the DOE, DENR, DOH, DTI-
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BPS, and other relevant government agencies, shall issue the appropriate guidelines
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and regulations, and the applicable permits, licenses, certificates, or authorizations for
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virtual pipelines, motor vehicles, and marine vessels transporting, storing or
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processing natural gas in its original state or liquefied form, as well as marine facilities
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used to import, receive, unload, load, transport, process, and store natural gas in its
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original or liquefied form, including those utilized as offshore LNG terminals. The DOTr
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shall monitor and ensure compliance therewith.
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Sec. 11. Powers and Responsibilities of the Department of Trade and Industry-
2, Bureau of Philippine Standards (DTTBPS). - In addition to its functions under RA No. 
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4109, entitled, "An Act to Convert the Division of Standards under the Bureau of
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Commerce into a Bureau of Standards, to Provide for the Standardization and/or
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Inspection of Products and Imports of the Philippines and for Other Purposes", the
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DTI-BPS, together with the DOE, shall determine, develop, formulate, promulgate,
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and revise the PNS for natural gas and PDNGI Facilities.
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Sec. 12. Powers and Responsibilities of the Department of Science and
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Technology (DOST). - In addition to its functions under Executive Order No. 128,
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otherwise known as the "Reorganization Act of the National Science and Technology
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Authority", the DOST shall undertake scientific and technological research and
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development for the improvement of new technologies in the PDNGI.
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Sec. 13. Referral to the Philippine Competition Commission (PCC). - Consistent
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with its functions under the PCA, the PCC shall:
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(a) Promote free and fair competition in all commercial economic activities in the
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PDNGI;
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(b) Prevent economic concentration in the PDNGI that may have the tendency
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to control the production, distribution, trade, or industry in a manner that
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would unduly stifle competition, lessen, manipulate or constrict the discipline
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of free markets; and
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(c) Penalize all forms of anti-competitive agreements, abuse of dominant
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position and anti-competitive mergers and acquisitions in the PDNGI, with the
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objective of protecting consumer 
welfare and advancing domestic and
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international trade and economic development.
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All matters involving or suspected by ERC and/or DOE to involve anti-
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competitive agreements or abuse of market power shall be referred to the PCC for
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investigation and adjudication. Where the act or acts referred to the PCC are highly
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technical in nature, the ERC and/or DOE shall assist the PCC in its inquiry and analysis
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of the facts.
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Sec. 14. Powers and Responsibilities of the National Commission on Indigenous
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Peoples (NCIP). In addition to its functions under RA No. 8371, otherwise known as
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"The Indigenous Peoples Rights Act of 1997" (IPRA), upon the DOE's endorsement in
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accordance with the PEP or upon the its certification that the PDNGI project is an
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energy project of national significance, the NCIP shall exempt such project from the
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requirements of Section 59, Chapter VIII of the IPRA, in accordance with the
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guidelines to be issued by the NCIP.
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CHAPTER III
14 
ORGANIZATION, OPERATION, AND REGULATION OF THE DOWNSTREAM
15 
NATURAL GAS INDUSTRY
16 
Sec. 15. Organization - For purposes of this Act, the PDNGI shall consist of the
17 
following sectors: supply, storage and regasification, transmission, and distribution of
18 
natural gas.
19 
The DOE shall lead and initiate Aggregation. The DOE may directly undertake
20 
this activity itself or enter into a joint venture, partnership, or other agreement with
21 
any other entity, including the private sector, for the proper implementation thereof.
22 
It may likewise delegate this function to any of its attached agencies and
23 
instrumentalities.
24 
In developing and establishing a natural gas Aggregation policy, and in issuing
25 
rules and regulations to implement the same, the DOE shall be guided by the principle
26 
of economies of scale, including the DOE's mechanisms that enable an Aggregator to
27 
implement procurement strategies that will mitigate supply risks for end-users and
28 
risks associated with a fragmented natural gas market.
29 
Sec. 16. DOE Permits and Issuances. - The DOE shall have the power and
30 
responsibility to evaluate, approve, and issue the permits necessary for the siting,
31 
construction, operation and maintenance, expansion, modification, rehabilitation,
15


1 
decommissioning, and abandonment of any PDNGI Facility or activity. Further, the
2 
DOE shall accredit Participants and acknowledge notifications of natural gas
3 
importation and exportation. Moreover, permits issued to Permit Holders may vary
4 
based on their intended use, such as Own-use Permit or TPA Permit.
5 
Sec. 17. Compliance with Philippine Laws, Rules, and Regulations. - Permit
6 
Holders and Participants shall comply with all Philippine laws, rules, and regulations
7 
implemented by the relevant government agencies.
8 
Sec 18. Compliance with Standards. — The DOE shall ensure that Permit Holders
9 
and Participants, products, facilities, services, and systems comply with the standards
10 
set by relevant government agencies in terms of quality, design, efficiency, safety,
11 
structural integrity, and operation and maintenance. Regulations shall be consistent
12 
with applicable Philippine and internationally accepted natural gas industry standards.
13 
Sec. 19. Confidential Information. - The government shall not use confidential
14 
or commercially sensitive information for purposes other than those provided herein
15 
and shall protect and limit the disclosure of such confidential or commercially sensitive
16 
information, unless allowed by the Permit Holder or Participant, or when required by
17 
laws, rules, and regulations.
18 
Sec. 20. Authority to Obtain Information. - The DOE, ERC, PCC, and other
19 
concerned government agencies may require any Permit Holder or Participant,
20 
through a valid order to furnish, within a reasonable period specified, all information
21 
and documents relating to all matters such as the permit, rates, and operation of the
22 
business and PDNGI Facilities, and provide to explanations on the information or
23 
documents submitted, subject to Section 19 of this Act. The failure of a Permit Holder
24 
or Participant to provide the required information or documents without a valid reason
25 
shall be punishable under this Act.
26 
Sec. 21. Natural Gas Supply. -The procurement, delivery, and pricing of natural
27 
gas from indigenous production facilities or from importation to the PDNGI shall be
28 
transparent and secure. If necessary, the DOE, subject to Section 19 of this Act, shall
29 
require the suppliers to submit relevant information pertaining to supply contracting,
30 
procurement, pricing, and distribution scheme to users for the purpose of monitoring.
16


1 
Procurement and utilization of indigenous natural gas, including without
2 
limitation, by gas-fired power plants, shall be prioritized over imported natural gas. An
3 
Indigenous Naturai Gas Supplier shall provide fair access to its natural gas supply in a
4 
non-discriminatory and transparent manner through physical supply, administrative or
5 
financial contracts, or any other arrangements allowed by the DOE.
6 
Power produced from indigenous natural gas shall have priority over other
7 
conventionai energy sources. Such prioritization shall cover indigenous natural gas
8 
power supply contracting, inciuding mechanisms for minimum supply requirements,
9 
and optimal guaranteed utilization volumes for plants.
10 
The DOE shall establish mechanisms for the optimal and full utilization of
11 
indigenous naturai gas in the generation, transmission, distribution, and supply of
12 
power, subject to standards and limitations consistent with the state's policy of
13 
ensuring energy security and consumer welfare. This inciudes requiring electricity
14 
suppliers to source a portion of their energy supply from power plants that use
15 
indigenous natural gas and determining the appropriate minimum percentage of the
16 
power generation mix that shouid be supplied by natural gas power plants that use
17 
indigenous natural gas.
18 
The PDNGI Facilities may be designed and constructed to ensure the
19 
accommodation of both indigenous natural gas and/or imported natural gas, pursuant
20 
to the standards determined by the DOE. The DOE shall establish measures to support
21 
the supply and use of indigenous natural gas in the domestic downstream natural gas
22 
sector.
23 
Sec. 22. Decommissioning and Abandonment of Downstream Naturai Gas
24 
Fadiity. - No Permit Holder shall abandon or decommission any portion of a PDNGI
25 
Facility without obtaining prior written authorization from the DOE and approval by
26 
the DOE of an abandonment and decommissioning plan based on Philippine or
27 
internationally accepted standards. The DOE shall, in coordination with the DENR,
28 
provide the guidelines and regulations for the decommissioning and abandonment of
29 
PDNGI Facilities.
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1 
Sec. 23. Administrative Ruies and Procedures. - The DOE shall issue the
2 
administrative rules and procedures for the discharge of administrative cases and
3 
imposition of administrative fines and penalties. The Rules of Court shall apply in a
4 
suppletory manner.
5 
Sec. 24. Fees. - All concerned government agencies shall have the authority to
6 
prescribe and collect fees and charges relating to the issuance or review of permits,
7 
and the supervision and regulation of the PDNGI.
8 
CHAPTER IV
9 
OPERATION OF DOWNSTREAM NATURAL GAS FACILITIES
10 
Sec. 25. PP>A/(? Transmission and Distribution System and Related Facilities. -
11 
The DOE shall issue a license or authorization to Permit Holders of PDNG transmission
12 
and distribution systems for the purpose of ensuring safe, efficient, and reliable
13 
infrastructure and facilities. This shall not be construed as conferring public utility
14 
status to the Permit Holders thereof.
15 
Sec. 26. Cross-Ownership - Fn entity may hold an interest in the ownership of
16 
upstream and downstream natural gas facilities, as well as the supply and aggregation
17 
of natural gas to gas buyers. Such ownership shall be allowed for operational and
18 
financial feasibility considerations, subject to the powers and responsibilities of the
19 
PCC under Section 13 of this Act. An aggregator may engage in the ownership and
20 
operation of natural gas-fired power plants, or vice-versa, subject to the approval of
21 
PCC and DOE. The PCC shall review compliance with the PCA, specifically to prevent
22 
substantial lessening of competition, while the DOE shall review the impact on energy
23 
security, market stability, and any other matters concerning the PEP.
24 
The DOE shall apply the applicable laws and regulations to ensure that public
25 
interest is protected.
26 
Sec. 27. LNGStorage and Regasification Terminals. - The operation of an LNG
27 
storage and regasification terminal shall not be considered as a public utility
28 
operation. This applies even if the LNG storage and regasification terminal supplies
29 
natural gas through a pipeline transmission system, where the recipients or off
30 
takers of the natural gas are power generation plants or other wholesale customers
18


1 
and not the general public, or if the LNG storage and regasification terminal has a
2 
jetty, where the jetty is not used for the transportation of passengers or cargo for
3 
general commerce.
4 
Sec. 28. Own-Use. - The Own-Use Permit Holder shall utilize its entire capacity
5 
exclusively for own-use and shall not be allowed to enter into TPA arrangements,
6 
unless approved by the DOE.
7 
The DOE may allow the use by a third party, if necessary, to address any issue
8 
on the availability of LNG supply which may arise.
9 
The DOE shall provide the rules and limitations on the participation of Own-
10 
Use Permit Holders in TPA arrangements, taking into account energy security and
11 
consumer welfare.
12 
Sec. 29. Third-Party Access (TPA). - A TPA Permit Holder shall utilize its entire
13 
capacity exclusively for TPA and shall not be allowed to utilize any such capacity for
14 
own-use, unless approved by the DOE.
15 
The DOE may allow a TPA Permit Holder to utilize its capacity for Own-Use, if
16 
necessary, to address any issue on the availability of LNG supply which may arise.
17 
The DOE shall provide the rules and limitations on the utilization of TPA Permit
18 
Holders' Capacity for Own-Use, taking into account energy security and consumer
19 
welfare.
20 
The TPA Permit Holder shall submit a regular report on the total Capacity,
21 
along with all relevant details, to the DOE for monitoring.
22 
Sec. 30. Third-Party Access (TPA) Principies. - Adherence to the principles of
23 
transparency, non-discrimination, and safe practices is the key to the beneficial
24 
participation of third-party users. In line with this, the following guiding principles shall
25 
be observed:
26
27
28
29
30
31
(a) 
The TPA shall be transparent and non-discriminatory with regard to the 
rates and services for the purpose of enhancing efficiency and 
optimization of capacity which shall further encourage investments in the 
PDNGI;
(b) 
The TPA shall encourage a diverse and sustainable market for natural gas 
beyond the power sector;
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1 
(c) The TPA shall be anchored on a safe, secure, reliable, and efficient
2 
operation for both the Permit Holder and the third-party users; and
3 
(d) The TPA Permit Holders shall conduct an open and sufficient consultation
4 
process with both existing and potentiai third-party users to discuss the
5 
available capacity; and
6 
(e) The TPA Permit Holders shall publish their available capacity, access terms
7 
and conditions, and aiiow the review and inspection of their facilities and
8 
records to verify the same.
9 
Sec. 31. Congestion Management - Whenever a TPA Permit Holder is no longer
10 
able to use or has not released the capacity without justifiable reason, the TPA Permit
11 
Holder of the PDNGI Facility shali have the authority to release and market the same.
12 
The procedure and criteria for the release shall be part of the TPA Code. The
13 
government agency which shall have an oversight function on this matter shall be
14 
designated in the TPA Code.
15 
CHAPTER V
16 
STANDARDS ON PRODUCT QUALITY, FACILITY, AND SAFETY PRACTICE
17 
Sec. 32. Standards on Downstream Natural Gas Facilities. - All PDNGI Facilities
18 
shall be required to provide high quality and efficient service, observe stringent safety
19 
systems, accord attention to design details and structural integrity, and employ best
20 
practices in operation and maintenance. Regulations shall be consistent with both
21 
applicable Philippine and internationally accepted natural gas industry standards. The
22 
DOE shall ensure compliance with these requirements.
23 
Applications for the issuance of DOE permits and continued operation of the
24 
PDNGI Facilities shall be subject to continuous compliance with these standards.
25 
Sec. 33. Standards on Product Quality. - The Permit Holder and Participant
26 
shall maintain the quality of natural gas supply to gas buyers in accordance with the
27 
Philippine and internationally accepted standards, and ensure that the delivery of
28 
natural gas complies with the purification requirements to ensure that associated
29 
compounds that are unnecessary or damaging to the PDNGI Facilities are eliminated.
30 
The DOE shall ensure compliance with this requirement.
20


1 
Sec. 34. Standards on Safety Practice. - The Permit Holder and Participant shall
2 
implement an acceptable health, safety, security, and environmental management
3 
system in accordance with applicable Philippine and internationally accepted
4 
standards. The DOE, DENR, DOH, and other concerned agencies shall ensure
5 
compliance with this requirement.
6 
CHAPTER VI
7 
RESPONSIBILITIES OF PERMIT HOLDERS AND PARTICIPANTS
8 
Sec. 35. Responsibilities of Permit Holders - A Permit Holder shall have the
9 
following responsibilities:
10 
(a) Align all goals, objectives, and accomplishment with the declared policies of
11 
this Act and the PEP;
12 
(b) Directly responsible and accountable for the construction, operation and
13 
maintenance of PDNGI Facilities by providing the necessary services,
14 
technology, and financing, either by itself or through its duly authorized
15 
contractors;
16 
(c) Secure a permit before engaging in any activity relating to siting, construction,
17 
operation and maintenance, expansion, modification, rehabilitation,
18 
decommissioning, and abandonment of PDNGI Facilities;
19 
(d) Comply with the regulatory obligations, maintain complete records, and
20 
submit all reportorial requirements and other documents as may be required
21 
by the DOE and other government agencies pursuant to this Act and its IRR;
22 
(e) Comply with the standards on natural gas quality, facility, construction and
23 
equipment installation, safety and security of operations and environmental
24 
protection in the siting, construction, operation and maintenance, expansion,
25 
modification, rehabilitation, decommissioning, and abandonment of PDNGI
26 
Facilities;
27 
(f) Operate the PDNGI Facility strictly adhering to the scope and limits of the
28 
permit, and in accordance with the HSSE best practices and the Philippine
29 
and internationally accepted standards;
30 
(g) Allow examiners of the Bureau of Internal Revenue (BIR) and Bureau of
31 
Customs (BOC) entry to the facility premises and full access to accounts.
21


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20
books, and records for tax and other fiscal purposes, in accordance with BIR 
and BOC rules and procedures;
(h) Allow the DOE, lA-HSSE IMT, ERC, PCC, and other government agencies, 
entry to the faciiity premises and full access to operational records for 
inspection and monitoring activities, in accordance with the rules and 
procedures of such government agencies;
(i) Give preference to qualified local talents for hiring, and to local companies 
or agencies in entering into contracts on projects or services which are 
required in the construction or operation of the PDNGI Facility;
(j) Hold the DOE, ERC, lA-HSSE IMT, and other government agencies, their 
officers, agents, and employees, free and harmless from and against all suits, 
claims, demands, or actions of any nature or kind, arising out of their acts or 
omissions in the performance of any activity in connection with the 
implementation of this Act;
(k) Participate in the development, issuance, and review of plans, protocols, 
standards, and codes applicable to the PDNGI; and
(l) Such other responsibilities as mandated by the DOE to ensure the 
deveiopment of the PDNGI.
CHAPTER VII 
INCENTIVES
21 
Sec. 36. Fiscal Incentives. - In recognition of the substantial investments
22 
needed for the development, construction, lease, operation and/or maintenance of,
23 
and conversion to natural gas facilities, all other activities in relation to the PDNGI
24 
value chain projects, as certified by the DOE, shall be included in Tier III of the
25 
Strategic Investment Priority Plan (SIPP), subject to the incentives provided under
26 
Title XIII (Tax Incentives) of the National Internal Revenue Code of 1997 (NIRC),
27 
as amended by Republic Act No. 11534, otherwise known as the "Corporate
28 
Recovery and Tax Incentives for Enterprises (CREATE) Act". Moreover, the
29 
registered projects shall also be entitled to value-added tax (VAT) and duty
30 
exemptions, as provided under Section 294 of the NIRC during the construction and
31 
expansion periods.
22


1 
Further, PDNGI projects, as certified by the DOE, shall be entitled to the
2 
following incentives:
3 
(i) Investments to convert facilities from oil and coal to gas shall be
4 
deemed as qualified capital expenditures under Section 294 (C) of the
5 
NIRC, as amended;
6 
(ii) The purchase and sale of indigenous natural gas, aggregated gas, and
7 
power generated by generation facilities using indigenous natural gas
8 
and aggregated gas shall be exempt from VAT: Provided, That the
9 
exemption from VAT for aggregated gas is only to the extent of the
10 
amount of indigenous natural gas attributed to be in the aggregated
11 
gas. This includes the (a) purchase and sale of indigenous natural gas
12 
and aggregated gas by an aggregator, reseller, supplier, person
13 
authorized by the ERC to operate facilities used in the generation of
14 
electricity, or end-user, and (b) purchase and sale of electricity or
15 
ancillary services produced by a generation facility using indigenous
16 
natural gas and/or aggregated gas by a person authorized to (i) operate
17 
facilities used in the generation of electricity or ancillary services, (ii)
18 
sell, broker, market or aggregate electricity to end-users, (iii)
19 
consolidate electric power demand of end-users for the purpose of
20 
purchasing and reselling electricity on a group basis, (iv) engage in the
21 
distribution of electricity, or (v) procure or provide ancillary services.
22 
These shall include all modes of purchase and sale, whether through a
23 
supply agreement, a duly-authorized market such as, but not limited
24 
to, the Wholesale Electricity Spot Market or the ancillary reserves
25 
market, financial gas contracts, NGSPA, or other mode.
26 
(iii) PDNGI Facilities shall be entitled to zero-rated VAT on their purchases
27 
of local supply of goods, properties and services needed for the
28 
development, construction and installation of their facilities.
23


1 
CHAPTER VIII
2 
PROMOTION OF COMPETITION
3 
Sec. 37. Anti-Competitive Behavior. - No Permit Holder or Participant, or any
4 
affiliate thereof, may engage in any anti-competitive behavior or abuse of its dominant
5 
position in accordance with the PCA.
6 
Sec. 38. Fair Access to Capitai and Off-Taker Market - The DOE shall issue
7 
applicable policies that promote the financial viability of the PDNGI and ensure
8 
competitive access to both capital and off-taker markets for natural gas.
9 
CHAPTER IX
10 
FINES AND PENALTIES
11 
Sec. 39. Administrative Fines andPenaities. - The following administrative fines
12 
and penalties shall be imposed on any Permit Holder or Participant who violates the
13 
provisions of this Act:
14 
(a) The permit, accreditation, or other approvals issued by the DOE under
15 
Section 16 of this Act, may be suspended or revoked, and the DOE shall
16 
impose upon the Permit Holder or Participant a fine ranging from Fifty
17 
Thousand Pesos (Php50,000.00) to Five Million Pesos (Php5,000,000.00)
18 
per violation, without prejudice to other appropriate administrative fines
19 
and penalties that other relevant government agencies may impose on the
20 
Permit Holder or Participant: Provided, That the schedule of fines provided
21 
for in this Section shall be increased by the DOE every five (5) years, for
22 
violations of:
23 
(i) Standards on PDNGI Facilities issued pursuant to Section 32;
24 
(ii) Standards on product quality issued pursuant to Section 33;
25 
(iii) Standards on safety practices issued pursuant to Section 34;
26 
(iv) Responsibilities of the Permit Holder and Participant pursuant to Section
27 
35;
28 
(v) PDNG Transmission Code, PDNG Distribution Code, PLSR Terminal Code,
29 
and TPA Code; and
30 
(vi) Orders or directives of the DOE in the implementation of this Act.
24


1 
(b) The applicable administrative penalty for Section 37 shall be pursuant to the
2 
PCA.
3 
Sec. 40. Criminal Fines and Penalties. - Appropriate fines and penalties under
4 
existing penal laws shall apply to any criminal violation associated with the
5 
implementation of this Act.
6 
CHAPTER X
7 
TRANSITORY PROVISIONS
8 
Sec. 41. Existing Systems. - PDNGI Facilities that have been constructed prior
9 
to the effectivity of this Act shall continue to be operated under their existing permits
10 
and shall comply with additional requirements as may be applicable.
11 
Suppliers who have entered into an NGSPA and have delivered natural gas prior
12 
to the effectivity of this Act shall continue to operate under the said contracts, subject
13 
to compliance with the additional requirements in this Act.
14 
All Permit Holders and Participants shall comply with the provisions of this Act
15 
within two (2) years from the effectivity of the IRR of this Act: Provided, That health,
16 
safety, security, environmental, construction, operation, and other permits, licenses,
17 
certificates, and authorizations issued prior to the effectivity of this Act that are not
18 
inconsistent herewith shall remain valid.
19 
PDNG Transmission Systems and PDNG Distribution Systems existing at the
20 
time of the effectivity of this Act shall be allowed to continue pursuant to the terms
21 
and conditions indicated in their franchise and until the lapse of the period accorded
22 
to them in the franchise.
23 
Sec. 42. Pending Application. - All applications for any activity in the PDNGI
24 
pending before the DOE upon the effectivity hereof shall be covered by this Act.
25 
CHAPTER XI
26 
FINAL PROVISIONS
27 
Sec. 43. Assignment or Transfer of Permit - Assignment or transfer of the
28 
permit or change of operatorship shall be allowed only upon prior written approval by
29 
the DOE based on acceptable reasons and compliance by the existing Permit Holder,
30 
the assumption by the assignee of all obligations of the existing Permit Holder, and
25


1 
upon meeting the minimum legal, technical, and financial qualifications by the
2 
assignee.
3 
The DOE may require Permit Holders to notify the DOE of any change in control
4 
or transfer of shares exceeding a specified threshold.
5 
Sec. 44. Amicable Settlement - All parties shall make their best efforts to
6 
amicably settle any dispute arising from the performance or interpretation of any
7 
provision of this Act.
8 
Sec. 45. Congressional Oversight - The Joint Congressional Energy
9 
Commission (JCEC) shall exercise oversight powers over the implementation of this
10 
Act. The DOE, ERC, and other relevant government agencies shall submit annual
11 
reports to the JCEC no later than the fifteenth day of September each year, which
12 
shall include the latest relevant data, implementation reviews and reports, and policy
13 
and regulatory issues.
14 
Sec. 46. Appropriations. - The amount necessary for the implementation of this
15 
Act shall be included in the annual General Appropriations Act.
16 
Sec. 47. Implementing Rules and Regulations. - The DOE shall promulgate the
17 
rules and regulations for the effective implementation of this Act within six (6) months
18 
after the effectivity of this Act.
19 
Sec. 48. Separability Clause. - If, for any reason, any provision of this Act is
20 
declared unconstitutional or invalid, the other parts or provisions hereof, which are
21 
not affected thereby, shall continue to be in full force and effect.
22 
Sec. 49. Repealing Clause. - Any law, presidential decree or issuance, executive
23 
order, letter of instruction, rule or regulation inconsistent with the provisions of this
24 
Act is hereby repealed or modified accordingly.
25 
Sec. 50. Effectivity. - This Act shall take effect fifteen (15) days after its
26 
publication in the Official Gazette or in a newspaper of general circulation.
Approved,
26