PCC rules
The Philippine Competition Commission (PCC) has indicated that ‘gas transmission pipelines’ shall not be considered as “public utility’, hence, these investments will not be needing franchise from Congress.
This was stated by Atty Christina Faye Condez-De Sangon, legislative and policy officer of the PCC, when the anti-trust body was asked on its position relating to the classification of gas pipeline investments that will be set up in line with the targeted liquefied natural gas (LNG) ventures in the country.
“The (gas) transmission system might not actually be classified as public utility and will not require a franchise,” the PCC official noted in a Senate Committee on Energy hearing relating to the deliberations of a pending Gas Bill at the legislative body.
She said the PCC first made such policy stipulation in the last Congress, “and we stand by that recommendation now based on studies conducted by the OECD (Organization for Economic Co-operation and Development) and the World Bank.”
De Sangon nevertheless averred the ‘gas distribution system’ shall be the facet of the gas investment chain that shall be considered as public utility and must require a legislative franchise.
The PCC official explained that it is the gas distribution system that they studied and opted to classify as public utility, because that is the segment that will be directly dealing with customers, hence, that is the component of the enterprise imbued with public interest.
“Distribution pipelines are basically the final step in delivering natural gas to individual consumers; while the transmission systems are really – at least from our understanding…it is designed as the system involving transmission of the large volumes of gas,” she opined.
Aside from securing a public utility franchise, prospective investors or industry players in gas distribution may also need to deal with the hurdle of foreign ownership limitation – which is 40-percent as stipulated under the Public Services Act and based on the mandates of the Philippine Constitution.
De Sangon said the concepts and business segment classifications that will require franchise or be considered as public utilities are still being studied thoroughly by the PCC, hence, the competition agency said it will be submitting its formal position paper to the Senate on that specific policy question.
“We would expound on this more on our position paper – there are a bit more of nuances that we discussed,” the PCC official stressed.
At this stage, she emphasized what is clear is for the gas pipeline projects to be subjected to regulatory processes and permitting of relevant agencies – based on the final provisions of the propounded Natural Gas Law of the country.
“We require that it needs permitting definitely, it may be a regulatory job but we would like to explore this concept further – possibly to ease the entry of players into the market,” De Sangon said.