Pulong bill to develop downstream natural gas industry

Published September 13, 2022, 11:35 AM

by Ellson Quismorio

House members led by Davao City 1st district Rep. Paolo Duterte are pursuing the development of the Philippines’ downstream natural gas industry as a way to help meet the country’s ever-rising energy demands and cushion future fuel price spikes.

Davao City 1st district Rep. Paolo Duterte (Facebook)

“Despite the establishment of the Philippine Energy Plan (PEP), threats of potential blackouts remain as the drilling activities in pursuit of exploring natural gas were halted. This is worsened by the skyrocketing prices of imported oil—signaling the urgent necessity to tap alternative sources of energy, particularly cleaner energy, from indigenous sources,” Duterte said in filing House Bill (HB) 4097.

Serving as co-authors of the measure were Benguet lone district Rep. Eric Yap, and ACT-CIS Party-list Reps. Edvic Yap and Jeffrey Soriano. HB 4097 aims to put in place a regulatory framework that will aid the transition of the country’s emerging natural gas industry to a fully developed sector.

Duterte said the Congress needs to quickly pass HB 4097 and other similar measures to address the anticipated elevated demand for electricity resulting from the country’s rapid post-pandemic growth.

The Duterte bill also defines the responsibilities of the various government agencies and private entities in furthering the development of, and ensuring a level playing field in, the Philippine Downstream Natural Gas Industry (PDNGI).

“Most importantly, this bill seeks to ensure the delivery of secure, sustainable, sufficient, affordable and environment-friendly energy to all economic sectors in the country,” the authors said.

The legislative proposal will enable Malampaya gas field project operator, such as the Prime Infrastructure, to expand into more natural gas projects.

The downstream natural gas industry,as defined under the bill, refers “to the sectors of transmission, distribution, supply, and use of natural gas and their related activities, such as importation, storing, regasification, transmission and distribution of natural gas to end-users”.

To encourage the investments needed for the construction, operation and maintenance of, and conversion to, natural gas facilities, such projects as certified by the Department of Energy (DOE), shall be included in the Strategic Investment Priority Plan (SIPP) for the next 10 years following the enactment and effectivity of the bill into law.

Among the tax incentives offered to PDNGI investors under the bill are income tax holidays, enhanced deductions and zero value-added tax (VAT).

Under the bill, the operation of liquefied natural gas (LNG) terminals, natural gas transmission systems, and natural gas distribution systems–including own-use facilities–are considered “energy projects of national significance” whose implementation shall not be subject to unnecessary administrative processing delays.

Operators of transmission and distribution pipelines and their related facilities considered as public utilities are required to obtain a legislative franchise and a Certificate of Public Convenience and Necessity (CPCN) from the Energy Regulatory Commission (ERC).