DOE chief gets wide decision-making powers over gas infrastructure investments

By on November 22, 2017

Concentration of power is being vested upon the Department of Energy (DOE) and the Office of the Secretary on the propounded next phases of investments in the country’s gas sector, Manila Bulletin reported Oct. 28.

In the draft Circular on Rules and Regulations for the Philippine Natural Gas Industry, the energy chief’s authority shall cover those on permitting and licensing to issuance of notice-to-proceed (NTP) on construction of gas projects up to the posting of performance bond relating to operation and maintenance of gas infrastructure facilities.

Outside of the investments being cast by state-run Philippine National Oil Company (PNOC), the proposed rules once enforced, may be treated as either vote of confidence or semblance of rejection on the vast powers that the DOE has been trying to assume in the gas sector’s investment reset phase.

In the proposed rules, it was stipulated that “after compliance with the permitting and financial closing, the DOE Secretary shall issue the PCERM (permit to construct, expand, rehabilitate and modify) as an authority by the operator to proceed with the construction, including the expansion and modification, whenever applicable of the natural gas facilities.”

The scope of such permitting process is not totally demarcated, if such will just be imposed on pipelines, spur lines and distribution networks or if other facilities shall also be covered.

The DOE held its second round of public consultation on the gas regulatory framework on October 27 (Friday), with the activity still anchored on securing inputs from stakeholders and interested investors.

Distribution system, as defined in the regulation framework, would refer to “the pipeline and related facilities used to transport natural gas extending between the last delivery point of the transmission system to the last connection point to the customer.” Less clear in this mandate would be the exact stretch that such policies are prescribed to, since ‘customer’ could refer up to the end-user that shall be directly using the gas as a commodity, whether in power or non-power applications.

The draft circular, nevertheless, indicated that for facilities that shall be for an entity’s own-use, these might be excluded from the permitting requirements that shall be secured from the energy department.

For pipelines, the DOE set out the need for operators to secure a Congressional franchise, but the 10-year duration of operation is being set unilaterally by the DOE, with an option for renewal of 10 years.

On the requisite approvals on gas projects, it was specified that “the applicant shall be given a period of three (3) months from date of issuance of NTP (notice-to-proceed) to secure permits or clearances from other government agencies and submit financial closing.”

It has also been specified that “the completion of construction shall be within the approved construction timeline,” that shall also be prescribed in the DOE’s permitting process.

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