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# DC2025-04-0005 — IRR of RA 12120 (Philippine Natural Gas Industry Development Act)

**Department Circular No. DC2025-04-0005**
Issued: March 26, 2025 | Secretary: Raphael P.M. Lotilla
Effective: ~April 10, 2025 (15 days after publication)
Source: raw/_ocr/regulations/dc2025-04-0005-p001-p020.txt, p021-p040.txt, p041-p060.txt, p061-p078.txt
Main text: 29 pages (§§1–68); Annexes A–C: pages 30–78

Promulgated pursuant to Section 49 of RA 12120. Repeals DC2024-01-0007.

---

## RULE I — TITLE, DECLARATION OF POLICY AND SCOPE

### SECTION 1. Title.

This Department Circular shall be known as the Implementing Rules and Regulations (IRR) of RA 12120, otherwise known as the "Philippine Natural Gas Industry Development Act."

### SECTION 2. Declaration of Policies.

It is hereby declared the policy of the State to:

(a) Promote natural gas as a safe, efficient, and cost-effective source of energy and an indispensable contributor to energy security by establishing the PDNGI for the benefit of all segments of the nation's population and all sectors of the economy;

(b) Develop natural gas as a reliable fuel for power plants capable of addressing peaking, mid-merit, and baseload demand while progressively transitioning to renewable energy sources;

(c) Promote natural gas as an energy fuel and develop the Philippines as an LNG trading and transshipment hub within the Asia-Pacific Region, ensuring alignment with the State's policy on transitioning to a low-carbon future consistent with SDGs on RE share;

(d) Provide a conducive industry environment through regulatory policies, localized PNS codes and standards, plans, and programs;

(e) Promote conversion of existing fossil fuel equipment to natural gas (if technically and financially feasible);

(f) Promote and hasten exploration and development of indigenous natural gas; prioritize indigenous over imported natural gas without impairment of contracts;

(g) Promote entry of investors under competition, transparency, and fair trade;

(h) Promote natural gas as a transition fuel to variable renewable energy by creating a legal and regulatory framework for the PDNGI;

(i) Ensure compliance with HSSE standards and consumer protection;

(j) Encourage inflow of private capital through equity participation;

(k) Ensure transparent and low-cost pricing with full public accountability, promoting operational and economic efficiency;

(l) Develop technical expertise in government agencies and the private sector;

(m) Promote Aggregation whenever economically beneficial for End-users and to mitigate natural gas supply and price shocks; and

(n) Facilitate development of power and non-power end-uses of natural gas (commercial, industrial, residential, transport); power rates from natural gas utilization subject to RA 9136 (EPIRA).

### SECTION 3. Scope.

This IRR covers:

(a) Framework for the development of the PDNGI and its transition from an emerging to a mature industry within a competitive natural gas market;

(b) Responsibilities of various government agencies and private entities;

(c) Permitting of siting, construction, operation, maintenance, expansion, modification, rehabilitation, decommissioning, and abandonment of PDNGI Facilities for Own-Use or TPA; and

(d) Accreditation of Participants in the trade of Natural Gas (purchase, Supply, Aggregation, Bunkering, Reselling, export, and other related activities).

### SECTION 4. Definition of Terms.

Key definitions:

| Term | Definition |
|------|-----------|
| Accreditation | Authorization granted by DOE to a natural or juridical person as a Participant in natural gas trade |
| Affiliate | Corporation that directly or indirectly controls, is controlled by, or is under common control of another corporation |
| Aggregation | Procurement of indigenous natural gas, combining with imported LNG, and selling the blend to buyers in the Philippines or abroad by an Aggregator. DOE sets minimum indigenous percentage and pricing mechanism |
| Aggregated Gas | Indigenous natural gas combined with imported LNG at the required minimum indigenous percentage. Pure imported LNG blends (no indigenous component) are NOT Aggregated Gas |
| Anti-Competitive Behavior | Violations of RA 10667 (Philippine Competition Act) |
| Applicant | Natural or juridical person who applied for Permit or Accreditation |
| Bunkering | Sale of natural gas for use by domestic or foreign marine vessels |
| Capacity | Handling design of a system expressed in volume, flow per time unit, or designated measurement unit |
| Conventional Energy Sources | Non-renewable fossil fuel sources (coal, oil, gas) |
| Conventional Transportation System | Network of fixed facilities (compressor stations, pipelines, metering) for natural gas delivery — includes PDNG Transmission and Distribution Systems |
| Decommissioning and Abandonment | Removal or condemnation of PDNGI Facility at end of productive life; includes site restoration |
| Delivery | Transmission or distribution of Natural Gas, and supply at wholesale or retail |
| Distribution | Transportation of natural gas through a PDNG Distribution System |
| End-user | Person who receives Delivery of Natural Gas for final use |
| Expansion | Activity resulting in increase of design Capacity |
| Financial Closing | Stage where legally binding financial commitment exists to fund a project |
| Force Majeure | Acts of God, strikes, enemy acts, fire/explosion, epidemic, court orders, or other events of similar importance |
| Gas Policy | Set of policies and guidelines issued by DOE to implement §18 (Aggregation) and §19 (Natural Gas Supply) and other related matters |
| Indigenous Natural Gas | Natural gas produced from fields within the territorial jurisdiction of the Philippines |
| LNG | Liquefied Natural Gas — natural gas liquefied by cooling at cryogenic temperature |
| LNG Storage and Regasification Terminal | All component facilities to receive, unload, load, store, and regasify LNG (includes jetty, unloading arms, cryogenic pipelines, tanks, pumps, boil-off gas compressors, vaporizers, control facilities, metering, send-out systems) |
| Modification | Major change or alteration to design or component of PDNGI Facility |
| Natural Gas | Gas consisting primarily of methane, ethane, propane, and butane with small amounts of heavier hydrocarbons and impurities, consistent with PNS or internationally accepted standards |
| NGSPA | Natural Gas Sales and Purchase Agreement — contract for delivery and sale of Natural Gas |
| Offshore | Areas situated at sea, some distance from the shore |
| Own-Use | Exclusive use of entire PDNGI Facility capacity by Permit Holder or its Affiliates |
| Own-Use Permit | Authorization issued by DOE to an Own-Use Permit Holder |
| Participant | Natural or juridical person engaged in trade of natural gas as supplier, aggregator, bunker trader, or reseller |
| Permit | Authorization issued by DOE for siting, construction, operation and maintenance, expansion, modification, rehabilitation, decommissioning, and abandonment of PDNGI Facilities for Own-Use or TPA; also applies to Accreditation of Participants |
| Permit Holder | Natural or juridical person who owns the PDNGI Facility and is granted a Permit |
| PDNG Dev Plan | Comprehensive plan for safe, secure, reliable natural gas supply and efficient PDNGI Facility operations, including PLSR Terminal Dev Plan, PDNG Transmission Dev Plan, and PDNG Distribution Dev Plan; incorporated in PEP |
| PDNG Distribution Code | Code formulated by DOE setting performance standards for conventional and virtual distribution systems |
| PDNG Distribution Dev Plan | DOE-prepared comprehensive plan for all PDNG Distribution Systems and Virtual Transportation Systems |
| PDNG Distribution System | Conventional and Virtual Transportation System from receipt (indigenous source, LNG terminal, or Transmission System) to End-user receiving facility |
| PDNGI Facility | LNG Storage and Regasification Terminal, PDNG Transmission System, PDNG Distribution System, and other related facilities |
| PDNGI | All Permit Holders and Participants involved in siting, constructing, operating PDNGI Facilities; and Participants in natural gas trade |
| PDNG Transmission Code | Code formulated by DOE setting performance standards for conventional transmission systems |
| PDNG Transmission Dev Plan | DOE-prepared comprehensive plan for all PDNG Transmission Systems |
| PDNG Transmission System | Conventional Transportation System from indigenous source or LNG Terminal to PDNG Distribution System |
| PEP | Philippine Energy Plan — overall energy program formulated and updated yearly by DOE, submitted to Congress under RA 7638 |
| PLSR Terminal Code | Code formulated by DOE setting performance standards for LNG Storage and Regasification Terminals |
| PLSR Terminal Dev Plan | DOE-prepared comprehensive plan for all LNG storage and regasification terminals |
| Rehabilitation | Major restoration to PDNGI Facility or any damaged component thereof |
| Renewable Gases | Hydrogen, ammonia, biomethane, synthetic methane, and other gases derived from renewable sources |
| Reselling | Procuring natural gas from a supplier or aggregator and reselling it to gas buyers |
| Supply | Procuring or producing and selling indigenous or imported natural gas to gas buyers in the Philippines or abroad |
| TPA (Third-Party Access) | Transparent, fair, reasonable, and non-discriminatory access and utilization by a third-party user of PDNGI Facility capacity |
| TPA Code | Code formulated by DOE setting performance standards for TPA |
| TPA Permit | Authorization issued by DOE to a Permit Holder that allows TPA |
| Transmission | Transportation of natural gas through a PDNG Transmission System |
| Ultimate Parent | Juridical entity that directly or indirectly controls a party and is not controlled by any other entity |
| Virtual Transportation System | Alternative methods of transporting natural gas other than Conventional Transportation System — includes land vehicles, sea vessels, with or without on-site modular regasification units |
| Waterfront | Facilities designated for handling, storing, loading, discharging, or transporting dangerous cargo; also called a "waterfront LNG plant" |

---

## RULE II — POWERS AND RESPONSIBILITIES OF GOVERNMENT AGENCIES

### SECTION 5. Powers and Responsibilities of the Department of Energy.

DOE has overall responsibility for supervising and monitoring the PDNGI. Key functions:

(a) Prepare the PDNG Dev Plan within two (2) years from effectivity of the Act, reviewed and updated every three (3) years after adoption;

(b) Establish gas quality standards and PNS codes via a Technical Committee (TC) co-chaired by DOE and DTI-BPS, with members from academe, trade/industry, consumer, professional associations, research institutions, government agencies, and testing institutions;

(c) Enforce PDNGI compliance with standards through technical regulations, reports review, and onsite inspections. Create an Inter-Agency HSSE Inspection and Monitoring Team (IA-HSSE IMT), co-chaired by DOE and DENR, with members from MARINA, PCG, DOLE, BFP, DOH, and other relevant agencies;

(d) Approve or issue Permits, Accreditations, acknowledgment of import/export notifications, and other endorsements. Processing governed by EVOSS (RA 11234). EVOSS Steering Committee to streamline PDNGI permitting;

(e) Review, suspend, or revoke Permits for non-compliance;

(f) Issue written approval for assignment or transfer of Permits (including share sales resulting in change in control);

(g) Issue PDNG Transmission Code, PDNG Distribution Code, PLSR Terminal Code, and TPA Code within two (2) years from the effectivity of this IRR;

(h) Endorse to PCC any reported or observed Anti-Competitive Behavior;

(i) Require regular and special reports, and real-time monitoring access to operation and maintenance activities;

(j) Publish list of Permit Holders and Participants with project status on DOE website quarterly;

(k) Temporarily take over or direct PDNGI operations during national emergency, as directed by the President upon NEDA recommendation;

(l) Create offices and appoint personnel as needed;

(m) Develop a comprehensive national strategy, with NREB input, for integrating Renewable Gases into the energy mix, with a roadmap for their adoption;

(n) Regulate quality of service and rates of TPA Conventional Transportation Systems (rate-setting based on full recovery of prudent and reasonable economic cost with reasonable rate of return, or internationally accepted rate-setting methodology);

(o) Ensure compliance with publication and unbundling of TPA Conventional Transportation System fees;

(p) Issue the Gas Policy within six (6) months from the date of effectivity of this IRR;

(q) Exercise other powers and functions necessary or incidental to the objectives of the Act; and

(r) Identify and assess stranded asset risk associated with natural gas infrastructure development (considering declining demand from energy transition, alternative energy carriers, stricter climate policies, and RE technology advances). DOE shall:
- Develop a transparent methodology for evaluating stranded asset risk for existing and proposed projects;
- Maintain a publicly accessible database tracking projects and their risk assessments, regularly updated;
- Establish and enforce regulations promoting responsible investment and encouraging timely transition to RE, including facilitating early retirement of high-risk assets through financial mechanisms;
- Coordinate with other agencies to align natural gas development with national climate goals.

### SECTION 6. Energy Regulatory Commission.

ERC powers in accordance with RA 9136 (EPIRA). May create offices for regulating power generated from natural gas.

### SECTION 7. Department of Environment and Natural Resources.

In addition to EO 192 functions, DENR (with DOE and PCG) determines and monitors environmental compliance for PDNGI Facilities under existing environmental laws (RA 8749 Clean Air Act, RA 7586/RA 11038 NIPAS/ENIPAS, RA 6657 CARP). Within six (6) months from effectivity of the Act, DENR shall establish national standards for methane emissions and other pollutants (including GHG) from natural gas industries not otherwise regulated.

### SECTION 8. Philippine Coast Guard.

In addition to RA 9993 functions, PCG (with DENR) determines and monitors marine environmental protection, maritime safety and security standards for offshore and waterfront PDNGI Facility siting, construction, operation, and decommissioning.

### SECTION 9. DOTr through MARINA.

MARINA has general jurisdiction over design, construction, manufacturing, acquisition, operation, supply, repair, and maintenance of vessels including LNG carriers; also over water transport utilities and maritime enterprises.

### SECTION 10. DOTr and Attached Agencies.

DOTr (with LTO, LTFRB, MARINA), in coordination with DOE, DENR, DOH, DTI-BPS, and others, issues guidelines, regulations, and applicable permits for virtual pipelines, motor vehicles, marine vessels transporting natural gas, and marine facilities used to import, receive, load, unload, transport, process, and store LNG — including offshore LNG terminals.

### SECTION 11. DTI-Bureau of Philippine Standards.

DTI-BPS (with DOE) determines, develops, formulates, promulgates, and revises PNS for natural gas and PDNGI Facilities.

### SECTION 12. Department of Science and Technology.

Undertakes scientific and technological R&D for improvement of new technologies in the PDNGI.

### SECTION 13. Department of Health.

(a) Ensures and monitors compliance with health standards of PDNGI Facilities and activities;
(b) Recommends standards for health risk assessment studies in natural gas accidents;
(c) Develops guidelines and health standards on treatment of patients affected by gas accidents; and
(d) Requires health data and information from PDNGI Facilities, Permit Holders, and Participants.

### SECTION 14. Philippine Competition Commission.

PCC shall:
(a) Promote free and fair competition in all PDNGI commercial economic activities;
(b) Prevent economic concentration that may unduly stifle competition; and
(c) Penalize anti-competitive agreements, abuse of dominant position, and anti-competitive mergers and acquisitions.

All matters suspected of involving anti-competitive agreements or abuse of market power shall be referred by ERC or DOE to PCC. ERC/DOE assist PCC on highly technical matters.

### SECTION 15. National Commission on Indigenous Peoples.

Upon DOE endorsement (PEP certification or certification as energy project of national significance), NCIP processes §59 IPRA certification precondition in accordance with RA 11234 (EVOSS) processes.

### SECTION 16. Philippine Energy Research and Policy Institute.

Pursuant to RA 11572, PERPI conducts R&D on renewable gas technologies (production, storage, distribution) with support from DOST and PNOC.

---

## RULE III — ORGANIZATION AND REGULATION OF THE DOWNSTREAM NATURAL GAS INDUSTRY

### SECTION 17. Structure.

The PDNGI consists of:

(a) Participants in the trade of Natural Gas:
1. Supplier
2. Aggregator
3. Reseller
4. Bunker Trader

(b) Permit Holders for PDNGI Facilities:
1. LNG Storage and Regasification Terminals
2. PDNG Transmission System
3. PDNG Distribution System
4. Virtual Transportation System

### SECTION 18. Aggregation.

DOE is lead agency for aggregation. DOE determines requirements to be an aggregator and designates aggregator(s); issues policies including minimum indigenous percentage and pricing mechanism, adhering to principles of economies of scale, energy transparency, consumer welfare, competitive pricing, security and reliability. DOE may direct attached agencies to participate in aggregation. DOE shall issue guidelines on Aggregation as part of the Gas Policy.

### SECTION 19. Natural Gas Supply.

Procurement and utilization of indigenous natural gas (including by gas-fired power plants) shall be prioritized over imported, consistent with energy security and consumer welfare. Indigenous gas suppliers and aggregators must provide fair and open access in a non-discriminatory and transparent manner.

Power from Indigenous Natural Gas has priority over other Conventional Energy Sources. DOE shall establish mechanisms for optimal indigenous gas utilization, including mandated minimum percentage of electricity demand sourced from indigenous gas (reviewed and adjusted as needed). DOE to issue Gas Policy guidelines on this prioritization within six (6) months of IRR effectivity.

### SECTION 20. Permits for PDNGI Facilities.

No natural or juridical person shall construct, operate and maintain, expand, modify, rehabilitate, or decommission and abandon a PDNGI Facility unless issued a Permit by DOE in accordance with Annex A (Guidelines for Issuance of Permits).

DOE Secretary approval required for Permit to Construct (PTC) and Permit to Operate and Maintain (POM). For all other Permits, only DNG-REC approval required.

### SECTION 21. Validity of Permits.

| Permit Type | Validity |
|-------------|---------|
| Notice to Proceed (NTP) | 1 year from date of issuance |
| Permit to Construct (PTC) | Per approved project baseline schedule (commences after NTP expiration) |
| Permit to Operate and Maintain (POM) | Maximum 25 years from PTC expiration; renewable for period determined at time of renewal |
| Other Permits | Per Permit Holder proposal, subject to DOE verification |

### SECTION 22. Creation and Functions of the Downstream Natural Gas Review and Evaluation Committee.

This IRR creates the **DNG-REC**, which shall:

(a) Receive, evaluate, approve, and if applicable, recommend to DOE Secretary for approval: policies, programs, Permits, implementing guidelines, and other issuances for PDNGI development;

(b) Recommend to DOE Secretary the guidelines implementing standards on product, facility, and safe practices for siting, construction, operation, maintenance, modification, expansion, rehabilitation, decommissioning, and abandonment;

(c) Supervise and monitor the progress of PDNGI Facility activities based on approved work program;

(d) Address any clarification raised by DOE Secretary on recommendations; and

(e) Implement all other necessary measures allowed under existing laws.

**DNG-REC Composition (per Annex A):**

| Role | Position |
|------|---------|
| Chair | Supervising Undersecretary, OIMB (or as otherwise designated by DOE Secretary) |
| Vice Chair | Supervising Assistant Secretary, OIMB (or as otherwise designated) |
| Member | Director, OIMB |
| Member | Director, Legal Services (LS) |
| Member | Director, Financial Services (FS) |

**DNG-REC Secretariat:** Head = Assistant Director, OIMB; Member = Natural Gas Management Division (NGMD), OIMB

**DNG-TWG (Technical Working Group):** Evaluates and recommends to DNG-REC results of legal, technical, and financial evaluations; Members = NGMD/OIMB, Downstream Conventional Energy Legal Services Division (LS), Conventional Energy Resources Compliance Division (FS)

### SECTION 23. Approval of Request for Extension.

DNG-REC may grant extension for: (a) Force Majeure; (b) non-issuance of government permit without Permit Holder's negligence or fault; or (c) other justifiable reasons without Permit Holder's fault. Extended period equals approved amended work program duration.

### SECTION 24. Decommissioning and Abandonment.

No Permit Holder may abandon or decommission any PDNGI Facility without prior written DOE authorization and DOE-approved abandonment plan based on Philippine or internationally accepted standards. DOE and DENR provide joint guidelines.

### SECTION 25. Assignment or Transfer of Permit.

Assignment or transfer (including operatorship change) allowed only upon prior DOE written approval. Not allowed near end of facility life (within 2 years of end of economic life) if assignee cannot comply with decommissioning guidelines or maintain environmental guarantee fund.

### SECTION 26. Change in Control.

Sale or acquisition of shares resulting in change of control over Permit Holder or Ultimate Parent requires prior DOE written approval. Permit Holder must demonstrate continued legal, technical, and financial qualifications.

### SECTION 27. Modification of Permit Conditions.

DNG-REC may recommend modification of any Permit condition, subject to DOE Secretary or DNG-REC Chair approval.

### SECTION 28. Submission of Reportorial Requirements by Permit Holder.

Permit Holder shall comply with reportorial requirements prescribed by Annex C (Guidelines for Submission of Reportorial Requirements).

### SECTION 29. Accreditation of Participants.

No natural or juridical person shall conduct trade of Natural Gas through a PDNGI Facility unless issued an Accreditation by DOE in accordance with Annex B (Guidelines for Issuance of Accreditation and Acknowledgment). DNG-REC approval required for all Accreditations.

### SECTION 30. Validity of Accreditation.

All Accreditations valid for five (5) years from date of issuance (unless earlier revoked or cancelled); renewable every five (5) years.

### SECTION 31. Modification of Conditions of Accreditation.

DNG-REC may approve any request for modification of Accreditation conditions.

### SECTION 32. Submission of Reportorial Requirements by Participant.

Participants shall timely submit reportorial requirements per Annex C.

### SECTION 33. Compliance with Philippine Laws.

Permit Holders and Participants shall comply with all Philippine laws, rules, and regulations implemented by relevant government agencies.

### SECTION 34. Compliance with Standards.

DOE ensures compliance with standards set by relevant government agencies for quality, design, efficiency, safety, structural integrity, and operation and maintenance. Regulations consistent with Philippine and internationally accepted natural gas industry standards.

### SECTION 35. Confidential Information.

DOE, ERC, or PCC determines whether submitted documents are confidential. Government shall not disclose confidential or proprietary information unless allowed by the Permit Holder or Participant, or required by law.

### SECTION 36. Authority to Obtain Information.

DOE, ERC, PCC, and concerned agencies may require any Permit Holder or Participant to provide all information and documents within a reasonable specified period, subject to §21 of the Act.

### SECTION 37. Administrative Rules and Procedures.

DC2022-11-0033 (Rules of Procedure for Administrative Cases in the Downstream Oil Industry), as amended, applies to administrative cases and imposition of administrative fines and penalties. Rules of Court apply suppletorily.

### SECTION 38. Fees.

Government agencies may prescribe and collect fees and charges for permit issuance, review, supervision, and regulation. Processing and evaluation subject to non-refundable fee per latest DOE Approved Schedule of Fees and Charges.

---

## RULE IV — OPERATION OF DOWNSTREAM NATURAL GAS FACILITIES

### SECTION 39. PDNG Facilities.

DOE issues licenses or authorizations to PDNGI Facility Permit Holders for safe, efficient, and reliable infrastructure, in accordance with Annex A.

### SECTION 40. Cross-Ownership.

Entity may hold interest in ownership of both upstream and downstream natural gas facilities, and supply and aggregation activities — allowed for operational and financial feasibility, subject to: (a) PCC review under RA 10667 to prevent substantial lessening of competition; and (b) DOE review of impact on energy security, electricity cost, market stability, and PEP considerations.

### SECTION 41. Own-Use.

Own-Use Permit Holder utilizes entire capacity exclusively for Own-Use; may not enter TPA arrangements without DOE approval (which shall specify standards and limitations). DOE may allow TPA by an Own-Use Permit Holder if necessary to address LNG supply availability issues.

### SECTION 42. Third-Party Access (TPA Permit Holders).

TPA Permit Holder utilizes entire capacity for TPA; may not use for Own-Use without DOE approval. DOE may allow Own-Use if necessary for LNG supply availability. TPA Permit Holder shall submit regular capacity reports (total capacity and all relevant details) to DOE.

### SECTION 43. Third-Party Access Principles.

Guiding principles for TPA:

(a) Transparent, fair, reasonable, and non-discriminatory — enhances efficiency and optimization; avoids overcapacity; encourages necessary investment;

(b) Encourages a diverse and sustainable market for natural gas beyond the power sector;

(c) Safe, secure, reliable, and efficient operation for both Permit Holder and third-party users;

(d) Open, transparent, and sufficient consultation with existing and potential third-party users on available capacity; and

(e) Regular publication of available capacity, access terms and conditions, and rates; open to review and inspection.

### SECTION 44. Negotiated TPA.

Commercial arrangement allowing Permit Holder and a third-party End-user or non-Affiliate to agree on negotiated terms and conditions for use of entire or portion of PDNGI Facility Capacity (not a public utility). Requirements: (a) submit notarized copy of terms and conditions to DOE; and (b) comply with §52 responsibilities, TPA Code, and Gas Policy.

### SECTION 45. Competitive TPA.

Commercial arrangement where Permit Holder offers entire or portion of its PDNGI Facility Capacity (not a public utility) to interested non-Affiliates through an open, transparent, non-discriminatory selection process. Requirements: (a) submit notarized copy of terms of reference to DOE; (b) open, transparent, non-discriminatory selection; and (c) comply with §52, TPA Code, and Gas Policy.

### SECTION 46. Regulated TPA.

Offer to the public of the entire or portion of Capacity of a Conventional Transportation System (fixed pipeline network — public utility). Requirements: (a) submit terms of reference to DOE; (b) availment process in accordance with guidelines issued by Permit Holder and approved by DOE; and (c) comply with §52, TPA Code, and Gas Policy.

### SECTION 47. Congestion Management.

When TPA Permit Holder cannot or does not release capacity without justifiable reason, DOE may direct its release. Procedure and criteria governed by TPA Code.

---

## RULE V — STANDARDS ON PRODUCT QUALITY, FACILITY, AND SAFETY PRACTICE

### SECTION 48. Standards on Downstream Natural Gas Facilities.

All PDNGI Facilities required to provide high quality and efficient service, observe stringent safety systems, and employ best practices in operation and maintenance. Consistent with Philippine and internationally accepted standards. DOE ensures compliance. Standards apply to both initial applications and continued operation.

### SECTION 49. Standards on Product Quality.

Permit Holder and Participant shall maintain natural gas supply quality per Philippine and internationally accepted standards and ensure Delivery complies with purification requirements eliminating unnecessary or damaging compounds. DOE ensures compliance.

### SECTION 50. Standards on Safety Practice.

Permit Holder and Participant shall implement an acceptable HSSE management system in accordance with applicable Philippine and internationally accepted standards. DOE, DENR, DOH, DOLE, and other agencies ensure compliance.

### SECTION 51. Safety Standards.

DOE, in collaboration with NREB and PNOC, shall develop and implement safety standards for Natural Gas including Renewable Gases to address their unique properties and risks.

---

## RULE VI — RESPONSIBILITIES OF PERMIT HOLDERS AND PARTICIPANTS

### SECTION 52. Responsibilities of Permit Holders.

(a) Align goals with declared policies of the Act and PEP;
(b) Take direct responsibility and accountability for construction, operation, and maintenance of PDNGI Facilities;
(c) Secure a Permit before engaging in any activity relating to PDNGI Facilities;
(d) Comply with regulatory obligations, maintain complete records, submit all reportorial requirements;
(e) Comply with standards on gas quality, facility, construction, equipment, safety, security, and environmental protection;
(f) Operate in strict adherence with Permit scope and HSSE best practices;
(g) Allow BIR and BOC entry for tax and fiscal purposes;
(h) Allow DOE, IA-HSSE IMT, ERC, PCC, and other agencies entry for inspection and monitoring;
(i) Give preference to qualified local talent and local companies in contracting;
(j) Hold DOE, ERC, IA-HSSE IMT, and other agencies free and harmless from suits arising from lawful acts in connection with implementation of the Act;
(k) Participate in development, issuance, and review of plans, protocols, standards, and codes;
(l) Establish and maintain a decommissioning fund at start of operations (consistent with DENR Environmental Guarantee Fund guidelines);
(m) Unbundle and publish rates and fees;
(n) Not engage in Anti-Competitive Behavior;
(o) Secure an insurance policy (copy submitted to DOE within 60 days from PTC/PTE/PTR/PTM/POM issuance) covering potential environmental, life, and property damage; and
(p) Other responsibilities mandated by DOE.

### SECTION 53. Responsibilities of Participants.

(a) Align goals with declared policies and PEP;
(b) Secure an Accreditation before engaging in natural gas trade;
(c) Comply with regulatory obligations, maintain complete records, submit all reportorial requirements;
(d) Comply with standards on natural gas quality in trade;
(e) Allow BIR and BOC entry for tax and fiscal purposes;
(f) Allow DOE, IA-HSSE IMT, ERC, PCC, and other agencies entry for inspection and monitoring;
(g) Give preference to qualified local talent and local companies;
(h) Hold agencies free and harmless from suits arising from lawful implementation acts;
(i) Participate in development of plans, protocols, standards, and codes;
(j) Unbundle and publish rates and fees;
(k) Not engage in Anti-Competitive Behavior; and
(l) Other responsibilities mandated by DOE.

---

## RULE VII — INCENTIVES

### SECTION 54. Fiscal Incentives.

All PDNGI Facilities (DOE-certified) shall undergo evaluation for possible inclusion in the Strategic Investment Priority Plan (SIPP) for incentives under Title XIII (Tax Incentives) of the NIRC as amended by RA 11534 (CREATE Act).

**VAT Exemption:** The following are exempt from VAT:

| Category | VAT Status |
|----------|-----------|
| Purchase and sale of Indigenous Natural Gas | Exempt |
| Purchase and sale of Aggregated Gas (indigenous portion only) | Exempt |
| Electricity or ancillary services produced by generation facilities using Indigenous Natural Gas and/or Aggregated Gas | Exempt |
| Pure imported LNG (no indigenous gas component — not "Aggregated Gas") | NOT exempt |

VAT exemption covers all modes of purchase and sale: supply agreements, WESM, ancillary reserves market, financial gas contracts, NGSPA, or other modes.

---

## RULE VIII — PROMOTION OF COMPETITION

### SECTION 55. Anti-Competitive Behavior.

In accordance with RA 10667, no Permit Holder, Participant, or Affiliate thereof may engage in any Anti-Competitive Behavior or abuse of dominant position.

### SECTION 56. Fair Access to Capital and Off-Taker Market.

DOE shall issue applicable policies promoting financial viability of the PDNGI and ensuring competitive access to both capital and off-taker markets for Natural Gas.

---

## RULE IX — FINES AND PENALTIES

### SECTION 57. Administrative Fines and Penalties.

DOE shall impose the following administrative fines (without prejudice to fines by other agencies):

| Violation | Fine |
|-----------|------|
| Violation of established Industry Standards | ₱500,000 per violation |
| Failure to comply with lawful orders, directives, or instructions issued by DOE | ₱1,000,000 per instance |
| Failure to submit reportorial requirements within prescribed period | ₱200,000 per instance |
| Failure to fulfill duties and responsibilities under §§52 and 53 | ₱100,000 per instance |

DOE shall review the schedule of fines every five (5) years. Anti-competitive penalty per §39 applies pursuant to RA 10667.

### SECTION 58. Criminal Fines and Penalties.

Applicable fines and penalties under existing penal laws apply to criminal violations in implementation of the Act.

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## RULE X — TRANSITORY PROVISIONS

### SECTION 59. Existing Systems.

PDNGI Facilities constructed prior to effectivity of the Act shall continue under their existing Permits and comply with additional requirements as applicable.

The Act shall not impair vested rights or obligations of contracts. Current and subsisting agreements remain valid until expiration or termination.

All Permit Holders and Participants shall comply with the provisions of the Act within two (2) years from the effectivity of this IRR. Health, safety, security, environmental, construction, operation, and other permits/licenses/certificates issued prior to the Act that are not inconsistent with the Act shall remain valid.

Existing PDNG Transmission and Distribution Systems continue pursuant to the terms and conditions in their franchise until lapse of the franchise period.

### SECTION 60. Pending Applications.

All applications pending before DOE upon IRR effectivity shall be covered by the Act. Applications requiring DOE review in connection with the Gas Policy shall be held in abeyance until issuance of the Gas Policy (to be issued within six (6) months of IRR effectivity).

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## RULE XI — FINAL PROVISIONS

### SECTION 61. Amicable Settlement.

All parties shall make best efforts to amicably settle any dispute arising from performance or interpretation of any provision of the Act and this IRR.

### SECTION 62. Congressional Oversight.

JCEC exercises oversight powers over implementation of the Act. Policy review five (5) years from effectivity, without prejudice to earlier periodic review.

### SECTION 63. Reportorial Requirement.

DOE, ERC, and other relevant agencies shall submit annual reports (including latest relevant data, implementation reviews, and policy/regulatory issues) to JCEC not later than September 15 of each year.

### SECTION 64. Appropriations.

Amount necessary for implementation shall be included in the annual General Appropriations Act.

### SECTION 65. Separability Clause.

Declaration of unconstitutionality or invalidity of any provision shall not affect other provisions, which continue in full force and effect.

### SECTION 66. Repealing Clause.

**Department Circular No. 2024-01-0007** (Amended Philippine Downstream Natural Gas Regulation) is hereby repealed. Any law, presidential decree, executive order, letter of instruction, rule, or regulation inconsistent with the provisions of the Act and this IRR is repealed or modified accordingly.

### SECTION 67. Saving Clause.

The following shall remain applicable and shall not be amended or repealed by the Act and this IRR:
- Presidential Decree No. 87 (Oil Exploration and Development Act of 1972)
- RA 9136 (Electric Power Industry Reform Act of 2001 / EPIRA)
- RA 9513 (Renewable Energy Act of 2008)

### SECTION 68. Effectivity.

This IRR takes effect fifteen (15) days after publication in the Official Gazette or in at least two (2) newspapers of general circulation and filing with the UP Law Center - Office of the National Administrative Register.

*Issued: March 26, 2025 at DOE, Energy Center, Rizal Drive cor. 34th Street, Bonifacio Global City, Taguig City, Metro Manila.*
*Signed: Raphael P.M. Lotilla, Secretary*

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## ANNEX A — GUIDELINES FOR ISSUANCE OF PERMITS

*24 pages (PDF pp. 30–53). Source: raw/_ocr/regulations/dc2025-04-0005-p021-p040.txt (pp. 30–40) and raw/_ocr/regulations/dc2025-04-0005-p041-p060.txt (pp. 41–53).*

### Permit Processing Timelines

| Stage | Processing Time |
|-------|----------------|
| DNG-TWG completeness check | 3 working days |
| DNG-TWG legal/technical/financial evaluation | 12 working days |
| DNG-REC approval/disapproval | 5 working days from DNG-TWG recommendation |
| DOE Secretary approval (PTC and POM only) | 5 working days from DNG-REC recommendation |
| Onsite verification by DNG-TWG + IA-HSSE IMT (POM only) | 10 working days from processing fee payment |
| Extension request validation | 15 working days (DNG-TWG) + 5 working days (DNG-REC) |

### Permit Sequence

NTP (1 year) → PTC (per baseline schedule; application submitted 30 working days before NTP expiration) → POM (25 years max; application submitted 30 working days from completion)

POM completion criteria: (1) Mechanical completion per EPC Contract; (2) Final Testing and Commissioning; (3) Acceptance by Permit Holder (acceptance certificate signed by Permit Holder and EPC contractor).

### NTP Documentary Requirements

Legal: SEC registration, Articles of Incorporation and By-Laws, latest GIS (within 12 months), Secretary's Certificate.

Technical: Applicant profile (executive summary, officers, project management team, org chart, business direction, major accomplishments); affiliated companies disclosure; project profile (site description, heavy industrial zone classification, adequate exclusion zone, permitting and study plan).

Financial: Work program and budget; audited Financial Statements (last 2 years); bank certification of cash balance; board resolution appropriating funds. Working capital must equal 100% of proposed work program. Supplemental funding sources accepted: additional equity, parent company support, or approved debt financing.

### PTC Additional Requirements

Legal: ECC from DENR, LGU building permits, NCIP certificate of non-overlap or certification precondition, DOLE registration, BFP fire safety evaluation clearance, other required permits.

Technical: Final project description; plot plans; technologies description; Philippine/international standards summary; detailed engineering design; work program with Gantt chart (procurement, delivery, commissioning milestones); project management team qualifications; manpower complement; third-party safety and quality validation; HSSE studies (offshore wind/wave, tsunami, typhoon, hydrodynamic, quantitative risk assessment, and others); Environmental Risk Assessment and Management Plan per Philippine environmental regulations and international standards.

Financial: Detailed work program with full breakdown and financing plan.

### Annex B — Guidelines for Issuance of Accreditation and Acknowledgment

*Pages 54–60. Standard accreditation application forms for Supplier, Aggregator, Bunker Trader, and Reseller; addressed to OIMB Director, 3rd Floor PNOC Building 5, Energy Center, Fort Bonifacio, Taguig City. Issuance not later than 20 working days from receipt of complete application.*

### Annex C — Guidelines for Submission of Reportorial Requirements

*Not captured in available OCR batches. Referenced in §§28, 32, and 57.*