Senate passes natural gas industry development bill on final reading

THE SENATE approved on third and final reading on Monday a bill seeking to develop the indigenous natural gas industry, which the government views as transition fuel en route to broader adoption of renewable energy.

With a 14-3 vote, senators approved Senate Bill No. 2793 or the Philippine Natural Gas Industry Development Act, with the Department of Energy tasked with overseeing the development of the downstream natural gas industry.

“This legislation supports our own and also international commitments to cleaner and more efficient energy production,” Senator Pilar Juliana S. Cayetano, who sponsored the measure, told the plenary after the bill’s approval.

“We have to remember that natural gas is a transition fuel and our goal is to move to renewables.”

Senator Sherwin T. Gatchalian voted against the measure, saying that it lacked mechanisms to govern competitive bidding as well as protections for consumers against high power costs.

Citing a provision of the bill giving “indigenous natural gas… priority over conventional energy sources,” he said that even if power from conventional sources is cheaper to procure and bid for, indigenous natural gas will still have an advantage despite being more expensive.

“This will push up spot prices, thereby placing the burden of higher prices on consumers,” the senator told the floor.

Minority Floor Leader Aquilino L. Pimentel III and Deputy Minority Leader Ana Theresia N. Hontiveros-Baraquel also opposed the bill, citing similar concerns over consumer safeguards.

Ms. Hontiveros-Baraquel said in her speech explaining her no vote that “This abandonment of the ‘least cost’ principle may even affect without categorically saying, the greatest potential of renewable energy to drive down electricity costs.”

The Philippines is under pressure to find other sources of indigenous energy with the imminent depletion of the Malampaya gas field, which supplies power plants accounting for a fifth of all power generated in the Philippines. The gas field is expected to run out of easily recoverable gas by 2027.

The government is aiming to raise the share of renewable energy in the country’s energy mix to 35% by 2030 and to 50% by 2040 from 22% now.

Under the bill, the Energy Regulatory Commission (ERC) is tasked with keeping track of the government’s share of revenue related to the production of indigenous natural gas sold to power plants.

Downstream natural gas industry projects, as certified by the Department of Energy, will also be entitled to a value-added tax exemption on the purchase and sale of indigenous gas attributed to aggregated fuel, as authorized by the ERC. — John Victor D. Ordoñez