1
Republic of the Philippines 
House of Representatives 
Quezon City, Metro Manila 
Nineteenth Congress 
First Regular Session 
HOUSE BILL NO. _____ 
Introduced by Representative Rudys Caesar G. Fariñas I 
EXPLANATORY NOTE 
There is a need to promote natural gas as an indispensable contributor to grid 
security by establishing the Philippine downstream natural gas industry (PDNGI) 
to benefit all segments of the nation's population and all sectors of its economy. 
Likewise, developing the Philippines as a liquefied natural gas (LNG) trading hub 
within the Asia-Pacific Region will require a conducive industry environment 
through the issuance of policies, regulations, safety codes, product quality and 
facility operational standards, and plans and programs geared towards the 
promotion and development of the PDNGI. 
To this end, this measure provides the following salient features, among others: 
The Department of Energy (DOE) shall have the overall responsibility of 
supervising and monitoring the development of the Philippine downstream 
natural gas industry. Accordingly, the DOE is authorized to issue a written 
approval on the assignment or transfer of interest on any permits. Said authority 
is after finding that the assignee or transferee has met all the legal, technical, 
and financial qualifications and has committed to assume all existing obligations 
of the permit holder. Likewise, the DOE will issue the Gas Transmission and 
Distribution Codes in coordination with the Energy Regulatory Commission 
(ERC) and in consultation with other concerned government agencies and the 
PDNGI participants. These Codes shall contain the standards and best practices 
on safe, high-quality, environmentally responsible operation and service, 
competitive rules, and reasonable rates of service.  
The Philippine Competition Commission (PCC) shall investigate any anti-
competitive behavior in any business in the downstream natural gas industry.  
Finally, the DOE will also issue directives to qualified government agencies, in 
their capacities as investing arms, to spearhead the development of the PDNGI 
value chain as it is imperative to catalyze its development within a given timeline 
according to the Philippine Energy Plan. 
November 21, 2022
3:39 pm
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Therefore, this representation seeks the urgent passage of this measure. 
RUDYS CAESAR G. FARIÑAS I 


 3
Republic of the Philippines 
House of Representatives 
Quezon City, Metro Manila 
Nineteenth Congress 
First Regular Session 
HOUSE BILL NO. _____ 
Introduced by Representative Rudys Caesar G. Fariñas I 
AN ACT 
PROMOTING THE DEVELOPMENT OF THE PHILIPPINE DOWNSTREAM 
NATURAL GAS INDUSTRY, CONSOLIDATING FOR THE PURPOSE ALL 
LAWS RELATING TO THE TRANSMISSION, DISTRIBUTION AND SUPPLY 
OF NATURAL GAS, AND APPROPRIATING FUNDS THEREFOR 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
CHAPTER I 
1 
TITLE AND DECLARATION OF POLICY 
2 
SECTION 1. Short Title. – This Act shall be known as the "Philippine 
3 
Downstream Natural Gas Industry Development Act”.   
4 
SEC. 2. Declaration of Policy. – It is hereby declared the policy of the State to:  
5 
(a)
Promote natural gas as a safe, environment-friendly, efficient and cost-
6 
effective source of energy, and an indispensable contributor to grid security, 
7 
especially with the entry of more intermittent renewable energy sources by 
8 
establishing the Philippine downstream natural gas industry (PDNGI) for the 
9 
benefit of all segments of the nation’s population and all sectors of its economy; 
10 
(b)
Promote natural gas as the energy fuel, which has tremendous potential
11 
to meet the increasing local demand for fuel, and the development of the 
12 
Philippines as a liquefied natural gas (LNG) trading and transshipment hub 
13 
within the Asia-Pacific Region. In all cases, the State shall ensure the safe, 
14 
secure, reliable, transparent, competitive and environmentally responsible 
15 
operation of the PDNGI value chain; 
16 
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(c) 
Provide a conducive industry environment through the issuance of 
1 
policies, regulations, safety code, product quality and facility operational 
2 
standards, and plans and programs geared towards the promotion and 
3 
development of the PDNGI; 
4 
(d) 
Promote the conversion of existing fossil fuel-operated machines and 
5 
facilities to natural gas use, provided it is technically and financially feasible;  
6 
(e) 
Promote access to and the financial viability of the PDNGI by liberalizing 
7 
the entry of investors under a system of competition, transparency and fair trade 
8 
and providing responsive policy support, with the end goal of attaining fair price 
9 
for all stakeholders; 
10 
(f) 
Ensure compliance with International and Philippine health, safety, 
11 
security, environment (HSSE) standards and best practices under a system of 
12 
safe, secure, high-quality, environmentally responsible operation and services 
13 
that afford protection to consumers; 
14 
(g) 
Encourage the inflow of private capital through equity participation by the 
15 
private sector in the downstream natural gas value chain including gas 
16 
transmission and distribution utilities; 
17 
(h) 
Ensure transparent and reasonable price of natural gas and rates for its 
18 
importation, storage and regasification, transmission and distribution in a 
19 
regime of open and fair competition and full public accountability that shall 
20 
promote 
greater 
operational 
and 
economic 
efficiency 
and 
enhanced 
21 
competitiveness of the Philippine products in the global market; 
22 
(i) 
Develop the necessary trades, technical expertise and skills to support the 
23 
PDNGI; and 
24 
(j) 
Facilitate the development of end-uses of natural gas including the use of 
25 
natural gas as fuel for power, commercial, industrial, residential and transport 
26 
that promote fuel diversity and compliance with existing environmental laws.  
27 
SEC. 3. Scope. – This Act shall provide a framework for the development of the 
28 
PDNGI and its transition from emerging industry into mature industry status 
29 
within a competitive natural gas market, and define the responsibilities of 
30 
various government agencies and private entities in furtherance of this national 
31 
goal. 
32 
All activities of the Department of Energy (DOE), Energy Regulatory Commission 
33 
(ERC) and other concerned government agencies relevant to the development and 
34 
regulation of the PDNGI shall be in accordance with this Act.  
35 
SEC. 4. Definition of Terms. – As used in this Act: 
36 
(a) 
Affiliates refer to the corporate relationships of two or more persons, one 
37 
of whom either owns or controls or is being controlled by other persons.  As used 
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5
herein, “control” shall mean the power to direct or cause the direction of 
1 
management policies as an inherent part of decision-making power; 
2 
(b) 
Anti-Competitive Behavior refers to the practices and agreements in 
3 
violation of the provisions of Republic Act No. 10667, otherwise known as the 
4 
“Philippine Competition Act”; 
5 
(c) 
Capacity refers to the maximum flow expressed in normal cubic meters 
6 
per time unit or in energy unit per time unit;  
7 
(d) 
Delivery refers to the transmission or distribution of natural gas and the 
8 
supply of natural gas at wholesale or retail; 
9 
(e) 
Distribution refers to the transportation of natural gas through a gas 
10 
distribution system to end-users;  
11 
(f) 
Distribution system refers generally to the pipeline and related facilities 
12 
used to transport natural gas extending between the last delivery point of the 
13 
transmission system to the last connection point to the end-user;   
14 
(g) 
End-user refers to any person that will receive delivery of natural gas for 
15 
resale or final use; 
16 
(h) 
Franchise refers to the right, privilege and authority issued by Congress 
17 
authorizing a person to engage in the transmission of natural gas or distribution 
18 
of natural gas within a specific geographical area; 
19 
(i) 
Gathering facilities refer to natural gas pipelines and its ancillary facilities 
20 
used to gather gas in the field and bring it to a location for processing or for 
21 
delivery at an interconnection with the gas transmission system. The terms 
22 
"gather” and "gathering" shall be construed accordingly; 
23 
(j) 
Importation refers to the act of bringing LNG into the Philippines; 
 
24 
(k) 
Insurance refers generally to a risk-transfer mechanism that ensures full 
25 
or partial financial compensation for the loss or damage caused by events beyond 
26 
the control of the insured party wherein compensation is normally proportionate 
27 
to the loss incurred; 
28 
(l) 
Liquefied natural gas or LNG refers to natural gas which has been liquefied 
29 
by cooling at a cryogenic temperature; 
30 
(m) 
Natural gas refers to gas obtained from boreholes and wells consisting 
31 
primarily of a mixture of methane, ethane, propane and butane with small 
32 
amounts of heavier hydrocarbons and some impurities, consistent with the 
33 
Philippine National Standards (PNS) or the standards developed by the 
34 
International Organization for Standardization (ISO);  
35 
(n) 
Natural gas distribution code refers to the code to be formulated by the 
36 
DOE pursuant to Section 5(g) of this Act that shall set the technical performance 
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6
standards for operating gas distribution utilities and the minimum financial 
1 
standards for gas distribution systems; 
2 
(o) 
Natural gas distribution system refers to the system of conventional 
3 
pipelines and related facilities extending from the delivery points where the gas 
4 
distribution system receives the natural gas to the point of connection in the 
5 
premises of the end-user; and any available virtual pipeline that allows 
6 
alternative modes of transportation; 
7 
(p) 
Natural gas distribution utility refers to any person engaged in the 
8 
operation of a natural gas distribution system providing services for general 
9 
public use, which requires a franchise to operate a gas distribution system; 
10 
(q) 
Natural gas sales and purchase agreement or NGSPA refers to any contract 
11 
or agreement for the delivery and sale of indigenous or imported natural gas by 
12 
and between sellers, suppliers, buyers and end-users; 
13 
(r) 
Natural gas transmission code refers to the code to be developed by the 
14 
DOE pursuant to Section 5(g) of this Act that shall set the technical performance 
15 
standards for operating gas transmission systems and the minimum financial 
16 
standards for gas transmission utilities; 
17 
(s) 
Natural gas transmission system refers to the system of high-pressure 
18 
pipelines, storage and its ancillary facilities that are used to transport natural 
19 
gas from the interconnection with gathering facilities, other LNG-related facilities 
20 
and other gas transmission or distribution systems; 
21 
(t) 
Natural gas transmission utility refers to a natural or juridical person that 
22 
has a franchise to operate or is intending to operate a gas transmission system 
23 
except own-use pipelines; 
24 
(u) 
Own-use permit refers to an authorization granted by the DOE to a permit 
25 
holder or operator for the exclusive use by the operator or its affiliates in the 
26 
operation of its natural gas facility; 
27 
(v) 
Permit refers to an authorization issued by the DOE for the importation, 
28 
construction, commercial operation and maintenance of natural gas facilities; 
29 
(w) 
Permit holder or operator refers to a natural or juridical person who is 
30 
granted a permit by the DOE to engage in the importation, construction, 
31 
commercial operation and maintenance of natural gas facilities; 
32 
(x) 
Person refers to a natural or juridical person, as the case may be, including 
33 
the national and local governments of the Republic of the Philippines, its 
34 
agencies and instrumentalities, and government-owned and controlled 
35 
corporations; 
36 
(y) 
Philippine downstream natural gas industry or PDNGI refers to the sectors 
37 
of transmission, distribution, supply, and use of natural gas and their related 
38 


 
 
 
7
activities, such as importation, storing, regasification, transmission and 
1 
distribution of natural gas to end-users;   
2 
(z) 
Philippine Energy Plan or PEP refers to the overall energy program 
3 
formulated and updated yearly by the DOE and submitted to Congress pursuant 
4 
to Republic Act No. 7638, otherwise known as the “Department of Energy Act of 
5 
1992”, as amended; 
6 
(aa) 
Rates refer to the payment on the utilization of the capacity and use of 
7 
other services offered by the permit holder or operator of the transmission and 
8 
distribution pipeline; 
9 
(bb) 
Supplier refers to any person engaged and registered with the DOE to trade 
10 
on indigenous or imported LNG and their subsequent supply to end-users; 
11 
(cc) 
Supply refers to the trade or sale of indigenous or imported natural gas 
12 
and their subsequent sale to end-users; 
13 
(dd) 
Third-party access or TPA refers to a transparent and non-discriminatory 
14 
access and utilization by a third-party user of the excess capacity of the LNG 
15 
terminal and its related facilities;  
16 
(ee) 
Transmission refers to the transportation of natural gas through a natural 
17 
gas transmission system;  
18 
(ff) 
Virtual Pipeline refers to alternative methods of transporting natural gas to 
19 
places where there is no pipeline network available. It is based on a modular 
20 
system of compression or liquefaction, transport and decompression and 
21 
regasification of natural gas, which communities, industries, gas stations and 
22 
others may use.  
23 
CHAPTER II 
24 
POWERS AND RESPONSIBILITIES OF THE DOE AND THE ERC 
25 
SEC. 5. Powers and Responsibilities of the DOE. – In addition to its existing 
26 
powers and functions, the DOE shall have the overall responsibility of 
27 
supervising and monitoring the development of the Philippine downstream 
28 
natural gas industry. Towards this end, the DOE shall perform the following 
29 
powers and functions:   
30 
(a) 
Prepare the Natural Gas Industry Development Plan (NGIDP) within two 
31 
(2) years from the effectivity of this Act, incorporating therein the plans 
32 
submitted by public and private stakeholders after open discussions and 
33 
consultations with them. The NGIDP shall consist of approved regasification, 
34 
transmission and distribution development plans which shall be integrated into 
35 
the Philippine Energy Plan (PEP), and reviewed and updated every three (3) years 
36 
after its adoption;  
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8
(b) 
Establish standards on gas quality, facility installation and safety of 
1 
operation. For this purpose, a Philippine Inter-Agency Technical Committee (PIA-
2 
TC) shall be created by the Bureau of Philippine Standards (BPS) to be chaired 
3 
by the DOE. The PIA-TC shall have as members the representatives of concerned 
4 
government agencies and private industries. A Philippine Inter-Agency Health, 
5 
Safety, Security and Environment Inspection and Monitoring Team (PIA-HSSE 
6 
IMT) shall likewise be created to monitor and enforce compliance with 
7 
established standards; 
8 
(c) 
Evaluate applications and issue permits on the importation, exportation, 
9 
receipt, unloading, loading, storage, regasification of liquefied natural gas; 
10 
transmission, distribution, marketing, utilization, aggregation of natural gas; 
11 
and the safe, secure, reliable and efficient planning, construction, operation, 
12 
expansion, modification, maintenance, decommissioning and abandonment of 
13 
the downstream natural gas industry infrastructure and facilities;  
14 
(d) 
Evaluate applications for permits or authorities to operate, including a 
15 
Notice to Proceed (NTP), a Permit to Construct, Expand, Rehabilitate and Modify 
16 
(PCERM), and a Permit to Operate and Maintain (POM) downstream natural gas 
17 
projects and facilities, accreditation to import, supply and transport natural gas, 
18 
Acknowledgement to Import (ATI) LNG and Acknowledgement to Supply and 
19 
Transport (AST) natural gas; 
20 
(e) 
Review, suspend or revoke, after due notice and hearing, permits issued 
21 
in accordance with the preceding paragraphs (c) and (d) herein, and Section 12 
22 
of this Act after a finding of non-compliance with the provisions of this Act, rules 
23 
and regulations that shall be issued to implement it, and related issuances; 
24 
(f) 
Issue a written approval on the assignment or transfer of interest on any 
25 
permits issued in accordance with Section 50 of this Act, after finding that the 
26 
assignee or transferee has met all the legal, technical, and financial 
27 
qualifications and has committed itself to assume all existing obligations of the 
28 
permit holder, and such assignment or transfer is in accordance with existing 
29 
laws, rules, and regulations: Provided, That permits requiring the prior issuance 
30 
of a legislative franchise shall not be subject to assignment or transfer of interest; 
31 
(g) 
Issue, in coordination with the ERC and in consultation with other 
32 
concerned government agencies and the PDNGI participants, the Gas 
33 
Transmission and Distribution Codes, which shall contain the standards and 
34 
best practices on safe, high-quality, environmentally responsible and consumer 
35 
protected operation and service, competitive practices and reasonable rates of 
36 
service; 
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9
(h) 
Endorse requests for investigation to the Philippine Competition 
1 
Commission (PCC) of any anti-competitive behavior in the conduct of any 
2 
business under the downstream natural gas industry;   
3 
(i) 
Issue directives to qualified government agencies, in their capacities as 
4 
investing arms, to spearhead the development of the PDNGI value chain as the 
5 
DOE may deem imperative to catalyze its development within a given timeline;  
6 
(j) 
Determine the qualifications and detailed responsibilities of the Natural 
7 
Gas Transmission System Operator (NGTSO) and Natural Gas Distribution 
8 
Utilities (NGDUs) pursuant to their responsibilities provided in this Act;   
9 
(k) 
Initiate actions against the NGTSO or NGDUs for failure to comply with 
10 
the qualifications and detailed responsibilities specified in this Act;  
11 
(l) 
Review and approve the natural gas supply and regasification development 
12 
plan of the regasification terminal owner or operator, natural gas transmission 
13 
development plan of the NGTSO, and the natural gas distribution development 
14 
plans of the NGDUs, and integrate the same into the PEP; 
15 
(m) 
 Require the PDNGI participants to submit the regasification, transmission 
16 
and distribution development plans, and regular and special reports regarding 
17 
the organization, business, conduct, practices, and management of any business 
18 
entity duly registered as part of the downstream natural gas industry, subject to 
19 
Section 20 hereof; and  
20 
(n) 
Exercise such other powers and functions as may be necessary or 
21 
incidental to attain the objectives of this Act. Subject to existing laws, rules and 
22 
regulations, the DOE is hereby authorized to create offices and appoint personnel 
23 
as may be necessary to efficiently and effectively implement this Act. 
24 
SEC. 6. Powers and Responsibilities of the ERC. – In addition to its existing 
25 
powers and functions, the ERC shall have the sole regulatory responsibility for 
26 
establishing the rates and related terms and conditions of service for the 
27 
transmission and distribution, regasification and supply of natural gas to the 
28 
extent that such activities are regulated pursuant to the requirements set forth 
29 
in this Act. It shall: 
30 
(a) 
In the public interest, establish and enforce a methodology for setting 
31 
transmission, distribution, and supply rates, taking into account all relevant 
32 
considerations, including the efficiency or inefficiency of the regulated entities. 
33 
The rates shall be to allow the recovery of just and reasonable costs and a 
34 
reasonable return to enable the entity to operate viably. The ERC may, upon due 
35 
notice and public consultation, adopt internationally accepted rate setting 
36 
methodology. The rate setting methodology so adopted and applied shall promote 
37 
efficiency and ensure a reasonable price or tariff, and the rates to be prescribed 
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10
shall be non-discriminatory. For this purpose, the ERC is hereby authorized to 
1 
require from all participants in the natural gas supply chain all necessary and 
2 
appropriate records and documents relevant to the determination of just and 
3 
reasonable fuel cost used in power generation as recoverable component of 
4 
electricity cost to end-users;  
5 
(b) 
Regasification services and supply services shall be subjected to rate 
6 
regulation when there is no competing regasification operators; 
7 
(c) 
Apply administrative procedures that will ensure the constitutional right 
8 
to due process; 
9 
(d) 
Before the end of April of each year, submit to the Office of the President 
10 
of the Philippines and Congress, copy furnished the DOE, an annual report 
11 
containing such matters or cases, which have been filed before or referred to it 
12 
during the preceding year, the actions and proceedings undertaken thereon and 
13 
its decision or resolution on each case. The ERC shall make copies of such report 
14 
available to any interested party upon payment of a charge, which shall reflect 
15 
the printing costs; 
16 
(e) 
Publish in newspapers of general circulation all its cases and decisions 
17 
involving rates;  
18 
(f) 
Create offices and appoint personnel thereto as may be necessary to 
19 
efficiently and effectively perform its functions as stipulated in this Act, subject 
20 
to existing laws, rules and regulations; and 
21 
(g) 
Exercise such other powers as may be necessary or incidental to attain the 
22 
objectives of this Act.  
23 
CHAPTER III 
24 
POWERS AND RESPONSONSIBILITIES OF GOVERNMENT AGENCIES 
25 
Sec. 7. Powers and Responsibilities of the Department of Environment and 
26 
Natural Resources (DENR). – In addition to its functions under Executive Order 
27 
No. 192, otherwise known as the “Reorganization Act of the Department of 
28 
Environment and Natural Resources”, the DENR shall, together with the DOE, 
29 
determine and monitor compliance with the environmental standards for the 
30 
location, construction, improvement, expansion, operation, rehabilitation, 
31 
repair, maintenance, decommissioning, and abandonment of LNG terminals, 
32 
natural gas transmission systems, and all related equipment and facilities. 
33 
Sec. 8. Powers and Responsibilities of the Department of Health (DOH). – In 
34 
addition to its functions under Executive Order No. 317, Series of 1941, entitled, 
35 
“Organizing the Department of Health and Public Welfare”, as amended, the DOH 
36 
shall, together with the DOE, determine and monitor compliance with the health 
37 
standards for the location, construction, improvement, expansion, operation, 
38 


 
 
 
11
rehabilitation, repair, maintenance, decommissioning, and abandonment of LNG 
1 
terminals, natural gas transmission systems, and all related equipment and 
2 
facilities. 
3 
Sec. 9. Powers and Responsibilities of the Department of Trade and 
4 
Industry-Bureau of Philippine Standards (DTI-BPS). – In addition to its 
5 
functions under Republic Act No. 4109, entitled, “An Act to Convert the Division 
6 
of Standards under the Bureau of Commerce into a Bureau of Standards, to 
7 
Provide for the Standardization and/or Inspection of Products and Imports of the 
8 
Philippines and for other Purposes”, the DTI-BPS shall, together with the DOE, 
9 
determine, develop, formulate, promulgate, and revise, the Philippine National 
10 
Standards for natural gas transmission systems, and for natural gas, in its 
11 
original or liquefied form, LNG terminals, all related equipment and facilities. 
12 
SEC. 10. Powers and Responsibilities of the Philippine Competition 
13 
Commission (PCC). – All matters concerning abuse of market power, 
14 
cartelization, and any anti-competitive or discriminatory behavior shall be 
15 
subject to the quasi-judicial powers of the PCC as provided for under Republic 
16 
Act No. 10667, otherwise known as the “Philippine Competition Act”. 
17 
CHAPTER IV 
18 
STRUCTURE, OPERATION AND REGULATIONS OF THE 
19 
DOWNSTREAM NATURAL GAS INDUSTRY 
20 
SEC. 11. Structure. – For purposes of this Act, the structure of the PDNGI value 
21 
chain shall consist of an LNG terminal and its related facilities, transmission, 
22 
distribution pipelines and their related facilities, storage and distribution-related 
23 
facilities, and supply and transport of natural gas.  
24 
SEC. 12. Permits. – The DOE shall have the power to issue, review, suspend 
25 
and revoke for cause, the permits necessary for the construction, expansion, 
26 
rehabilitation, modification, operation and maintenance of any PDNGI facility or 
27 
activity. Own-use permit for natural gas facilities shall be allowed for the 
28 
exclusive use of the operator and its affiliates in the operation of its facilities. The 
29 
holder of an own-use permit shall still comply with the requirements in this Act. 
30 
Transmission and distribution of natural gas shall be exempted from franchise 
31 
requirement. 
32 
The owner and operator of an LNG terminal shall have the option to apply for 
33 
both permits and simultaneously perform the functions of an own-use LNG 
34 
terminal permit holder, pursuant to Section 35 of this Act, and a third-party 
35 
access (TPA) LNG terminal permit holder pursuant to Section 26 of this Act, to 
36 
the extent of the capacity allowed by and during the period specified in each type 
37 
of permit.  
38 


 
 
 
12
SEC. 13. Rate Regulation. – The rate of charges and fees for the services of 
1 
transmission or distribution pipelines and their related facilities shall, when they 
2 
function as public utilities, be subject to the review and approval by the ERC. 
3 
The rate methodology to be applied by the ERC shall be based on the principle 
4 
of full recovery of prudent and reasonable costs incurred, including a reasonable 
5 
return on rate base, or such other principles that will promote the determination 
6 
of just and reasonable rates that is consistent with the encouragement of private 
7 
investments and goal of developing a PDNGI infrastructure.  
8 
SEC. 14. Compliance with Philippine Laws, Rules and Regulations. – 
9 
Operators or permit holders of PDNGI facilities shall comply with all Philippine 
10 
laws, rules and regulations implemented by the different agencies of the 
11 
government. 
12 
SEC 15. Compliance with Standards. – The DOE shall ensure that downstream 
13 
natural gas products are of high quality, and natural gas facilities provide 
14 
efficient service, observe stringent safety systems, accord attention to design 
15 
details and structural integrity and employ operational and maintenance best 
16 
practices. Regulations shall be consistent with applicable Philippine and 
17 
internationally-accepted natural gas industry standards. 
18 
SEC. 16. Confidential Information. – The government shall not use confidential 
19 
or commercially sensitive information for purposes other than those provided 
20 
herein and shall protect and limit the disclosure of confidential or commercially 
21 
sensitive information, unless allowed by the operator or when required by laws, 
22 
rules and regulations. 
23 
SEC. 17. Authority to Obtain Information. – The DOE, ERC and other 
24 
concerned government agencies may require any downstream natural gas player 
25 
or permit holder, through a valid order and with due regard to confidential 
26 
information, proprietary data and trade secrets, to furnish, within a reasonable 
27 
period specified, all information and documents relating to all such matters as 
28 
to the permit, rates and operation of business and natural gas facilities, and 
29 
provide explanations on the information or document submitted, subject to 
30 
Section 16 of this Act.  The failure of a PDNGI participant or permitee to provide 
31 
the required information or document without valid reason shall be punishable 
32 
under this Act. 
33 
SEC. 18. Supply of Natural Gas. – Existing laws and rules governing the 
34 
upstream natural gas sector shall provide the government the option to sell 
35 
directly or otherwise authorize a service contractor to sell its share of the 
36 
indigenous production. Accordingly, the Secretary of Energy may, when natural 
37 


 
 
 
13
gas supply conditions so require, direct the supply of such share of indigenous 
1 
production to the downstream natural gas sector.  
2 
The operator of an LNG-related facility shall likewise ensure the 
3 
accommodation of both indigenous and imported supply of natural gas. The DOE 
4 
shall support and ensure the implementation of any plan to upgrade an LNG 
5 
terminal and its ancillary facilities into a hub for international trading and trans-
6 
shipment.   
7 
Any entity engaged in the distribution of natural gas may engage in the supply 
8 
of the same.                                                                                                                          
9 
SEC. 19. Abandonment of Downstream Natural Gas Facility. – No holder of a 
10 
permit for the construction, installation, operation or maintenance of a 
11 
downstream natural gas facility shall abandon or withdraw from service any 
12 
portion of said downstream natural gas facility or project without obtaining prior 
13 
authorization from the DOE. The DOE shall, in coordination with the DENR, 
14 
provide the guidelines and regulations for decommissioning and abandonment 
15 
of natural gas infrastructures and facilities. 
16 
SEC. 20. Registration and Reportorial Requirements of Natural Gas 
17 
Participants, Facilities, Import, Export and Supply. – Holders of permits for 
18 
the construction, installation, operation or maintenance of a downstream 
19 
natural gas facility, including importers, exporters and supplier and transporter 
20 
of natural gas or LNG, shall be registered with the DOE. Appropriate reportorial 
21 
requirements shall likewise be required for proper supervision and monitoring 
22 
in accordance with the implementing rules to be issued subsequently. 
23 
SEC. 21. Rules of Practice. – All concerned government agencies shall issue the 
24 
appropriate rules of procedure to serve as guideline for administrative legal 
25 
proceedings.  The Rules of Court shall apply in a suppletory manner. 
26 
SEC. 22. Fees. – All concerned government agencies shall have the authority to 
27 
prescribe and collect fees and charges relating to the issuance or review of 
28 
permits, and the supervision and regulation of the PDNGI. 
29 
CHAPTER V 
30 
FRANCHISE REQUIREMENT 
31 
SEC. 23. Transmission and Distribution Pipeline and Related Facility as 
32 
Public Utility. – Operators of transmission and distribution pipelines and their 
33 
related facilities considered as public utility shall be required to obtain a 
34 
legislative franchise and a Certificate of Public Convenience and Necessity 
35 
(CPCN) from the ERC. 
36 
Operators of virtual pipelines and their related facilities, which are likewise 
37 
considered as public utilities, shall no longer be required a legislative franchise. 
38 


 
 
 
14
However, such operators shall be required to secure a CPCN from the concerned 
1 
agency having appropriate jurisdiction over them, in accordance with the 
2 
provisions of Commonwealth Act. No. 146, otherwise known as the “Public 
3 
Service Act”, as amended.  
4 
SEC. 24. Philippine Ownership Requirement. – As required under Article XII, 
5 
Section 11 of the Constitution, no franchise, certificate, or any other form of 
6 
authorization of a public utility shall be granted except to citizens of the 
7 
Philippines or to corporations or associations organized under the laws of the 
8 
Philippines, at least sixty percent (60%) of whose capital is owned by such 
9 
citizens. 
10 
SEC. 25. LNG Terminals Not a Public Utility. – The operation of an LNG 
11 
terminal shall not be considered as a public utility operation. Hence, it shall be 
12 
exempted from securing a legislative franchise and a Certificate of Public 
13 
Convenience and Necessity.  
14 
CHAPTER VI 
15 
THIRD-PARTY ACCESS 
16 
SEC. 26. Third-party Access (TPA) Obligation. – Available and uncommitted 
17 
excess capacity of an LNG terminal, transmission and distribution pipelines and 
18 
related facilities shall be made accessible to third-party users. The ERC shall, in 
19 
coordination with the DOE and in consultation with the PDNGI participants, 
20 
ensure the full implementation of the TPA and shall issue the TPA Code within 
21 
one (1) year from the effectivity of this Act.  
22 
The DOE is hereby authorized to synchronize activities to optimize and 
23 
stabilize the utilization of existing infrastructure for the extraction, storage, and 
24 
delivery of natural gas, such as the Malampaya natural gas facilities, which shall 
25 
be subject to the third-party access provision in order to integrate the same with 
26 
the PDNGI.  
27 
SEC. 27. Available Capacity. – A TPA shall apply only to the available and 
28 
uncommitted excess capacity of LNG terminal, transmission or distribution 
29 
pipelines and their related facilities, but excluding those constructed and 
30 
operated under a dedicated use agreement or for own use. The operators thereof 
31 
shall conduct an open and sufficient consultation process with both existing and 
32 
potential third-party users to discuss the available capacity and other available 
33 
services. 
34 
To ensure safe and reliable operation, the operator shall determine, subject to 
35 
the review and recommendation by the DOE, the available and uncommitted 
36 
excess capacity of the natural gas facilities offered to third parties. The operator 
37 


 
 
 
15
shall likewise allocate such excess capacity based on the following criteria as 
1 
they pertain to the third-party user: 
2 
(a)  Proposed contract price and terms; 
3 
(b) Credit-worthiness; 
4 
(c)  Availability of a functioning  off-take facility;  
5 
(d) Ability to meet fuel specification parameters of the LNG facility; and 
6 
(e)  Other relevant factors that may directly affect the allocation. 
7 
Non-availment by any third-party user of the excess capacity so allocated and 
8 
offered shall not be a ground for the denial or cancellation of any permit under 
9 
this Act. 
10 
SEC. 28. Third-party Access (TPA) Principles. – Adherence to the principles of 
11 
transparency, fair competition, and safe practices is the key to the beneficial 
12 
participation of third-party users. In line with this, the following guiding 
13 
principles shall be observed:   
14 
(a) Competition in the downstream natural gas industry must be encouraged 
15 
because it promotes efficiency and lowers costs and prices to the benefit of 
16 
end-users; 
17 
(b) Investments in natural gas supply and infrastructure from both local and 
18 
foreign sources, which are otherwise prevented by actions of incumbent 
19 
monopolistic companies shall be earnestly pursued and supported; 
20 
(c) Benefits to be derived from the diverse and sustainable use of natural gas 
21 
make it an ideal tool of development; 
22 
(d) Participation of third parties in the downstream natural gas industry shall be 
23 
anchored on safe and measurable standards of service and practice; 
24 
(e) Open and sufficient consultation between permit holders or facility operators 
25 
on the available and excess capacity of natural gas is essential in the 
26 
formulation of supply agreements between permit holders or facility operators 
27 
and third-party users; 
28 
(f)  Transparency in business activities shall consistently be observed to spur 
29 
confidence. Pursuant thereto, permit holders or facility operators shall 
30 
publish their available and uncommitted excess capacity, access terms, and 
31 
conditions, and allow the review and inspection of their facilities and records 
32 
to verify the same. 
33 
SEC. 29. Congestion Management. – Whenever the holder of a capacity is no 
34 
longer able to use or has not released the capacity without justifiable reason, the 
35 
permit holder or the operator of the facility shall have the authority to release 
36 
and market the same. The procedure and criteria of the release shall be part of 
37 


 
 
 
16
the TPA Code.  The government agency which shall have an oversight function 
1 
on this matter shall be designated in the TPA Code. 
2 
SEC. 30. Approved Access Conditions and TPA Contracts. – Prior to the 
3 
conduct of negotiations with third parties, the permit holder or the facility 
4 
operator shall request the DOE for the review and recommendation of its access 
5 
conditions in accordance with the TPA Code. All subsequent access contracts 
6 
shall be reviewed and approved by the DOE. 
7 
SEC 31.  Infrastructure Development Period. – To develop the TPA, the TPA 
8 
Code shall provide an infrastructure development period and the TPA shall 
9 
become obligatory only against the permit holder or facility operator if it can be 
10 
demonstrated that there is already sufficient demand necessary to justify the 
11 
investment and sustain the additional operational requirement. For this 
12 
purpose, the DOE shall review and attest to the validity of supply and demand 
13 
outlook for natural gas.  
14 
CHAPTER VII 
15 
STANDARDS ON FACILITIES, PRODUCT AND SAFETY PRACTICE 
16 
SEC. 32. Standards on LNG Ships and LNG Facility. – All PDNGI facilities shall 
17 
be predicated to be of high quality and efficient service, observe stringent safety 
18 
systems, accord attention to design details and structural integrity and employ 
19 
operational and maintenance best practices. Regulations shall be consistent 
20 
with both applicable Philippine and internationally-accepted natural gas 
21 
industry standards. The DOE shall ensure compliance with this requirement.  
22 
SEC. 33. Standards on Product Quality. – The permit holder or operator shall 
23 
maintain the quality of gas supply to end-users in accordance with the Philippine 
24 
and internationally accepted standards and ensure that delivery of indigenous 
25 
or imported LNG comply with the purification requirements to ensure that 
26 
associated compounds that are unnecessary or damaging to the LNG 
27 
regasification facility and other related natural gas facilities used for storage, 
28 
distribution and transportation of natural gas supply are eliminated. The DOE 
29 
shall ensure compliance with this requirement. 
30 
SEC. 34. Standards on Safety Practice. – The permit holder or operator shall 
31 
implement an acceptable health, safety, security and environment management 
32 
system in accordance with applicable Philippine and internationally accepted 
33 
standards. The DOE shall ensure compliance with this requirement. 
34 
CHAPTER VIII 
35 
RESPONSIBILITIES OF THE PERMIT HOLDER OR OPERATOR 
36 
SEC. 35. Responsibilities of the Permit Holder or Operator. – A permit holder 
37 
or operator shall have the following responsibilities: 
38 


 
 
 
17
(a)  
Align all its goals and objectives to the accomplishment of the declared 
1 
policies of this Act; 
2 
(b) Be directly responsible for the construction and operation of LNG facilities by 
3 
providing the necessary services, technology and financing, either by itself or 
4 
through its duly authorized subcontractors, without entitlement from the 
5 
Philippine government to any reimbursement of any expense incurred;  
6 
(c) Comply with applicable Philippine laws and regulations relating to tax, labor 
7 
and employment, health, safety, indigenous people’s rights, environmental 
8 
protection and ecological preservation;  
9 
(d) Comply with the regulatory obligations, maintenance of complete records and 
10 
submission of all reportorial requirements and other documents as may be 
11 
required by the DOE, ERC and other government agencies pursuant to this Act 
12 
and its implementing rules;  
13 
(e) Implement the natural gas project strictly adhering to the scope and limits of 
14 
the permit and operate in accordance with Philippine and international 
15 
standards;  
16 
(f) Allow and facilitate, based on a valid order, the entry to the facility of the 
17 
examiners of the Bureau of Internal Revenue and the Bureau of Customs and 
18 
allow them full access to accounts, books, and records for tax and other fiscal 
19 
purposes;  
20 
(g) Allow, based on a valid order, the entry of personnel of the DOE, ERC, PIA-
21 
HSSE IMT and other government agencies to the facility and grant them full 
22 
access to operational records for inspection and monitoring activities;  
23 
(h)  Give preference to qualified local talents for hiring and local companies or 
24 
agencies in entering into subcontracts on projects or services, which are required 
25 
in the construction or operation of the LNG facility;  
26 
(i)  Hold the DOE, ERC, PIA-HSSE IMT and other government agencies or other 
27 
affected individuals free from all claims, demands or actions arising out of its 
28 
failure to comply with laws, regulations, standards, contracts, and permits in 
29 
connection with accidents, damages, or injuries which are beyond their control; 
30 
and   
31 
(j) Observe in the regular operational meeting of the DNG-REC and in the 
32 
development, issuance and review of plans, protocols, standards and codes 
33 
applicable to the natural gas project. 
34 
CHAPTER IX 
35 
INCENTIVES 
36 
SEC. 36. Fiscal Incentives. – In recognition of the substantial investments 
37 
needed for the construction of, operation and maintenance of, and conversion to 
38 


 
 
 
18
natural gas facilities, the PDNGI value chain projects, as certified by the DOE, 
1 
shall be included in the Strategic Investment Priorities Plan (SIPP) for the next 
2 
ten (10) years from the effectivity of this Act. Entities engaged in said projects 
3 
that are duly registered by any Investment Promotion Agency (IPA) shall be 
4 
entitled to all the incentives under Title XIII (Tax Incentives) of the National 
5 
Internal Revenue Code of 1997, as amended. 
6 
The sale of natural gas to locators inside the ecozone shall be subject to zero 
7 
percent (0%) Value-Added Tax (VAT), pursuant to the National Internal Revenue 
8 
Code of 1997, as amended. 
9 
SEC. 37. Streamlined Regulatory Process. – The operation of LNG terminals, 
10 
natural gas transmission systems, natural gas distribution systems, own-use 
11 
LNG terminals, own-use natural gas transmission systems, and own-use natural 
12 
gas distribution systems shall be considered as energy projects of national 
13 
significance (EPNS) whose implementation shall not be subject to unnecessary 
14 
administrative processing delays pursuant to Executive Order No. 30, series of 
15 
2017. To be considered an EPNS, a project has to be endorsed by the DOE.  
16 
SEC. 38. Withdrawal of Exemptions. – To achieve the declared policies of this 
17 
Act, particularly in relation to the promotion of fair and non-discriminatory 
18 
treatment of public and private sector entities in the development of the PDNGI 
19 
infrastructure, all existing tax exemptions applicable to persons engaged in the 
20 
transmission or the distribution of natural gas, insofar as such exemptions relate 
21 
to revenues derived from the transmission or the distribution of natural gas, 
22 
shall be deemed revoked upon the effectivity of this Act, any law to the contrary 
23 
notwithstanding. 
24 
CHAPTER X 
25 
PROMOTION OF COMPETITION 
26 
SEC. 39. Anti-Competitive Behavior. – No gas transmission utility, gas 
27 
distribution utility or supplier, or affiliate thereof, may engage in any anti-
28 
competitive behavior or abuse of market power, specifically the prohibition 
29 
against monopolies and combinations in restraint of trade under Article 186 of 
30 
the Revised Penal Code and Chapter III of the Philippine Competition Act.   
31 
SEC. 40. Functional and Structural Unbundling. – All PDNGI participants shall 
32 
functionally and structurally unbundle their business activities and rates in 
33 
accordance with the particular sector. The ERC shall, within nine (9) months 
34 
from the effectivity of this Act, promulgate the unbundling rules and regulations.  
35 
SEC. 41. Complaint and Investigation Procedures. – The ERC shall, within 
36 
nine (9) months AFTER the effectivity of this Act, promulgate rules and 
37 
regulations providing for a complaint and investigation procedure that shall, 
38 


 
 
 
19
without limitation, provide the party alleged to have engaged in anti-competitive 
1 
or abusive activities with notice and an opportunity to be heard.  
2 
SEC. 42. Affiliated Suppliers. – In order to prevent anti-competitive conduct, 
3 
service contractors, gas transmission utilities and gas distribution utilities that 
4 
own or control affiliates that are suppliers shall conduct their businesses, as 
5 
follows: 
6 
(a) 
No preference shall be given to the affiliate supplier over other persons in 
7 
contracting, scheduling and balancing of available capacity, as well as 
8 
curtailment, or the imposition of tariffs; 
9 
(b) 
Marketing information provided to the affiliate supplier shall be provided 
10 
to any non-affiliated supplier that is a competitor or potential competitor; 
11 
(c) 
Employees of the affiliate supplier shall, to the maximum extent possible, 
12 
function independently in making business decisions; and 
13 
(d) 
Books of accounts and records of the affiliate supplier shall be maintained 
14 
separately. 
15 
 
 
CHAPTER XI 
16 
FINES AND PENALTIES 
17 
SEC. 43. Administrative Fines and Penalties. -  The following administrative 
18 
fines and penalties shall be imposed on any industry participant who violates 
19 
the provisions of this Act: 
20 
(a) The permit issued by the DOE under Chapter IV, Section 12 of this Act, may 
21 
be suspended or revoked and the DOE shall impose upon the operator a fine of 
22 
Fifty thousand pesos (Php50,000.00) per violation of any provision under 
23 
Chapter VIII, Section 35 of this Act,  without prejudice to other appropriate 
24 
administrative fines and penalties that other relevant government agencies may 
25 
impose on the operator: Provided, That the schedule of fines  provided for in this 
26 
Section shall be increased by the DOE every five (5) years. 
27 
(b) The permit issued by the DOE under Chapter IV, Section 12, may be 
28 
suspended or revoked upon the recommendation by the ERC and the operator 
29 
may be charged by the ERC a fine of Five hundred thousand pesos 
30 
(Php500,000.00) per violation of any provision under Chapter IV, Section 13 of 
31 
this Act. This is without prejudice to other appropriate administrative fines and 
32 
penalties that other relevant government agencies may impose against the 
33 
operator. 
34 


 
 
 
20
(c) Congress may, upon the recommendation of the DOE, ERC or other 
1 
government agencies, as the case may be, revoke such franchise or privilege 
2 
granted to the party found in violation of the provisions of this Act.  
3 
SEC. 44. Criminal Fines and Penalties. – Appropriate fines and penalties under 
4 
existing penal laws shall apply to any criminal violation associated in the 
5 
implementation of this Act. 
6 
CHAPTER XII 
7 
TRANSITORY PROVISIONS 
8 
SEC. 45. Existing Systems. – Natural gas facilities that have been constructed 
9 
prior to the effectivity of this Act shall continue to be operated under their 
10 
existing permits and shall comply with additional requirements as may be 
11 
applicable. 
12 
Suppliers who have entered into an NGSPA with end-users and have delivered 
13 
indigenous or imported natural gas prior to the effectivity of this Act shall 
14 
continue to operate under the said contracts, subject to compliance with the 
15 
additional requirements in this Act. 
16 
SEC. 46. Pending Application. – All applications on any activity in the natural 
17 
gas value chain pending before the DOE upon the effectivity hereof shall be 
18 
covered by this Act.  
19 
CHAPTER XIII 
20 
     FINAL PROVISIONS 
21 
SEC. 47. Assignment or Transfer of Interest. – Assignment or transfer of 
22 
interest of the permit shall be allowed only upon prior written approval by the 
23 
DOE based on acceptable reasons and compliance by the operator, the 
24 
assumption by the assignee of all obligations of the former permit holder, and 
25 
upon meeting the minimum legal, technical, and financial qualifications of the 
26 
transferee. 
27 
SEC. 48. Consultation and Arbitration. – All parties shall make their best 
28 
efforts to amicably settle any dispute arising from the performance or 
29 
interpretation of any provision of this Act. 
30 
     SEC. 49. Natural Gas Oversight Commission. - Upon the effectivity of this 
31 
Act, a congressional commission, hereinafter referred to as the "Natural Gas 
32 
Oversight Commission", is hereby constituted. The Natural Gas Oversight 
33 
Commission shall be composed of ten (10) members, with the Chairpersons of 
34 
the Committee on Energy of the Senate and the House of Representatives, as Co-
35 
Chairpersons, and four (4) additional members from each House, to be 
36 
designated by the Senate President and the Speaker of the House of 
37 
Representatives, respectively. The minority shall be entitled to pro rata 
38 


 
 
 
21
representation but shall have at least one representative in the Natural Gas 
1 
Oversight Commission. 
2 
The Natural Gas Oversight Commission shall, in aid of legislation, perform the 
3 
following functions: 
4 
(a) Set the guidelines and overall framework to monitor the proper 
5 
implementation of this Act; 
6 
(b) Look into the appropriateness of creating a single independent regulatory 
7 
body when the conditions prevailing so require; 
8 
(c) Conduct a periodic review of this Act at least once every three (3) years; 
9 
(d) Determine inherent weaknesses in the law and recommend necessary 
10 
remedial administrative or legislative measures; 
11 
(e) Approve the budget for the programs of the natural gas of Oversight 
12 
Commission and all disbursements therefrom;  
13 
(f) Submit periodic reports to the President of the Philippines and Congress; 
14 
and 
15 
(g) Perform such other powers and functions as may be necessary to attain 
16 
its objectives. 
17 
To carry out its powers and functions, expenses incurred by the Natural Gas 
18 
Commission during the initial implementation of this Act shall be charged 
19 
against the current appropriations of the Senate and shall thereafter be included 
20 
in the annual General Appropriations Act. 
21 
The Natural Gas Oversight Commission shall adopt its internal rules of 
22 
procedure, conduct hearings and receive testimonies, reports and technical 
23 
advice, invite or summon by subpoena ad testificandum any public official, 
24 
private individual or any other person to testify before it, or require any person 
25 
by subpoena duces tecum to produce before it such records, reports, documents 
26 
or other materials as it may require, and generally exercise all the powers 
27 
necessary to attain the purposes for which it is created.  
28 
The Natural Gas Oversight Commission shall be assisted by a secretariat to 
29 
be composed of personnel who may be seconded from the Senate and the House 
30 
of Representatives and may retain consultants. The secretariat shall be headed 
31 
by an executive director, who possesses a sufficient background and competence 
32 
on policies and issues relating to the downstream natural gas industry. 
33 
SEC. 50. Appropriations. – The amount necessary for the implementation of 
34 
this Act shall be included in the annual General Appropriations Act.  
35 
SEC. 51. Implementing Rules and Regulations. – The DOE shall, in 
36 
consultation with the ERC, relevant government agencies such as the DENR, 
37 
DOH, Department of Transportation (DOTr), Philippine Ports Authority (PPA), 
38 


 
 
 
22
DTI and Department of Finance (DOF), the PDNGI participants, non-
1 
governmental organizations and end-users, promulgate rules and regulations for 
2 
the effective implementation of this Act within twelve (12) months AFTER the 
3 
effectivity of this Act.  
4 
SEC. 52. Separability Clause. – If for any reason, any provision of this Act is 
5 
declared unconstitutional or invalid, the other parts or provisions hereof, which 
6 
are not affected thereby, shall continue to be in full force and effect. 
7 
SEC. 53. Repealing Clause. – Any law, presidential decree or issuance, executive 
8 
order, letter of instruction, rule or regulation inconsistent with the provisions of 
9 
this Act is hereby repealed or modified accordingly.  
10 
SEC. 54. Effectivity. – This Act shall take effect fifteen (15) days after its 
11 
publication in the Official Gazette or in a newspaper of general circulation. 
12 
Approved, 
13