A senior legislator on Friday asked the administration to hasten the implementation of new law that mandates the establishment of the Philippine Downstream Natural Gas Industry (PDNGI).
The new law aims to accelerate the development of indigenous clean fuel and transform the country into a trading and transshipment hub for liquified natural gas (LNG) in the Asia-Pacific Region.
“The Department of Energy needs to step on the gas on this law recently signed by President Marcos, to help achieve energy security and develop a transition fuel for the government’s accelerated switch from fossil fuel to renewable,” Camarines Sur Rep. Luis Raymund Villafuerte said following the release of the implementing rules and regulations for Republic Act 12120.
Villafuerte co-authored the law, otherwise known as “The Philippine Natural Gas Industry Development Act.”
The IRR provides that power produced from indigenous natural gas shall have priority over other conventional energy sources, and that it shall cover indigenous natural gas power supply contracting, including mechanisms for minimum supply requirements.
In addition, the IRR provides that the procurement and utilization of indigenous natural gas, including without limitation, by gas-fired power plants, shall be prioritized over imported natural gas.
Villafuerte said RA 12120, “provides for a slew of incentives to set the stage for an industry environment conducive to promoting and developing PDNGI while keeping the government aligned with its climate policy on transitioning to a low-carbon and, later, zero-carbon future by progressively raising the share of RE in the Philippine energy mix.”
He said the IRR-listed incentives to entice private business groups to invest in capital-intensive PDNGI facilities include exemption from the value-added tax of the purchase and sale of indigenous natural gas and power generated by generation companies using indigenous natural gas and aggregated gas.
However, the VAT exemption, according to the IRR, shall only cover the amount of indigenous natural gas used in the aggregated gas.
Natural gas refers to gas comprising primarily of a mix of methane, ethane, propane, and butane plus small amounts of heavier hydrocarbons; while liquified natural gas (LNG) refers to natural gas that has been liquefied by cooling it at a cryogenic temperature or below the cooling point of water.
Aggregated gas, meanwhile, refers to indigenous or locally produced natural gas that has been combined with or supplemented by imported LNG.