Senate Bill No. 1955 / Committee Report No. 160
An Act Providing for the National Energy Policy and Regulatory Framework for the Philippine Liquified Petroleum Gas Industry
Tuesday, 19 January 2021
Delivered by the Honorable Win Gatchalian, Senator of the 18th Congress:
Mr. President, the legislation we are sponsoring today seeks to regulate and promote an important energy source in our country – liquified petroleum gas or LPG, as it is commonly known. Specifically, LPG refers to commercial propane gas, butane gas, or a mixture of the two. LPG accounts for 12% of the country’s demand for petroleum products in 2019. It is a versatile fuel used for many purposes: heating, lighting, and cooking for households, industries, and commercial establishments; and even fuel for motor vehicles, with overall domestic consumption growing at an average of 6% annually.
According to the most updated data of the Philippine Statistics Authority, more than 8 million Filipino households or approximately 40% use LPG for cooking. This means 4 in 10 households are dependent on LPG daily. One possible reason is cost. A 353 pesos LPG cylinder can last a little over a month when used for cooking compared to 441 pesos of electricity used for the same purpose. This 88-peso difference makes LPG the cheaper alternative by 25%. So crucial is LPG in a Filipino’s life that it is classified as a basic necessity under Republic Act No. 7581 or the Price Act, and is subject to price freeze during calamities, emergencies, or similar circumstances.
Yet, despite the crucial role of LPG in the economy, there is still no comprehensive regulatory framework governing the industry. The existing framework, if one may call it that, is essentially a patchwork of various policy issuances authored by the Department of Energy, Department of Trade and Industry – Bureau of Philippine Standards, other government agencies, and even local government units.
Senate Bill No. 1955 or the LPG Act seeks to streamline this patchwork of executive issuances into a clear legal and regulatory framework to govern the Philippine LPG industry. The regulatory reforms embodied by this legislation would ensure more efficacious health, safety, security, environmental, quality, and competition standards for the benefit of consumers as well as LPG participants. For the benefit of our peers, I will discuss the salient points of this lengthy comprehensive legislation as succinctly as possible focusing on two important aspects: safety and competition.
Safety is crucial because LPG is a highly flammable and even explosive fuel that poses a major fire hazard if not stored or handled properly. According to the Bureau of Fire Protection there were 1,161 reported fire incidents between 2010 and August 2020 attributed to LPG explosions.
Maaaring na-aalala niyo pa ang nangyaring pagsabog nuong 2013 sa Serendra sa Global City, Taguig na kumitil ng ilang buhay at nag-iwan ng iba pang sugatan. Lumabas sa imbestigasyon na gas leak ang naging sanhi nito. Marahil nabalitaan niyo rin ang pagsabog sa isang water refilling station nuong Hunyo taong 2019 sa Gastambide Street sa Sampaloc, Manila na nag-iwan ng pitong sugatan at sumira ng ilang ari-arian. Tulad ng nangyari sa Serendra, ang dahilan ng pagsabog ay isang leak na nagmula sa tangke ng LPG. Ginoong Pangulo, hindi sana mangyayari ang mga aksidenteng ito kung mayroong angkop na panuntunan sa ligtas na paggamit ng LPG.
As such, there are three main features of the bill to provide safeguards for the sound use of LPG.
First, this bill outlines with precision the various responsibilities of government entities engaged in the regulation of the LPG industry. The Department of Energy will be the primary enforcer and implementor of this Act and will serve as the primary licensing authority for qualified LPG stakeholders. The bill also vests DOE with significant enforcement and visitorial rights to ensure that the various Philippine National Standards or PNS and codes promulgated by the DTI-BPS for all aspects of the LPG industry are strictly complied with by all LPG stakeholders. The DTI-BPS, DILG, BFP, LTO, MARINA, PNP, DENR, and LGUs also have responsibilities outlined in the law. To ensure cohesive standards across all agencies, DOE is given the power to create technical working groups and technical committees involving all these agencies.
Second, the bill also lays down in detail the responsibilities of LPG industry participants under the law. Importers, bulk suppliers, bulk distributors, haulers, refillers, trademark owners, marketers, dealers, and retail outlets are specifically enjoined to observe stringent safety protocols and comply with clear-cut and streamlined regulatory processes.
Third, the bill establishes the LPG Cylinder Improvement Program, which will ensure that unsafe cylinders will immediately be taken out of circulation and replaced with new cylinders that meet strict quality requirements. Hopefully, this will significantly decrease the number of LPG-linked explosions and fires in the future.
The continued development of competition in the LPG market, on the other hand, is important for the benefit of consumers. As such, the LPG Act institutionalizes the Cylinder Exchange and Swapping Program where consumers can bring any brand of empty LPG cylinder to any retail outlet and use it to purchase another brand of LPG in cylinder carried by the retail outlet.
Sa ngayon po, kung ano yung tatak ng silindro mo, yun lang ang pwede mong bilhin na LPG. Kaya kung gusto mong lumipat sa ibang klase ng LPG dahil mas mura ito, hindi ka basta bastang makakalipat dahil kailangan mo munang bumili ng bagong silindro.
Through the Cylinder Exchange and Swapping Program, consumers are no longer limited by the brand of LPG cylinder they are holding and can source LPG from various brands depending on the price. This fosters true price competition within the LPG sector.
To ensure compliance of all interested parties with the provision of this law, we have provided an extensive enumeration of prohibited acts and their corresponding penalties. Considering the economic and public safety ramifications of non-compliance with responsibilities under this law, we can be sure that LPG industry participants will be made to comply.
In closing, Mr. President, I would like to note that various versions of this legislation have been pending in Congress since 2004, way back during the 13th Congress. Considering the importance of LPG as a household energy source, and keeping in mind its hazardous quality if left improperly regulated, it is certainly high time for this bill to finally become law. Therefore, Mr. President, along with the co-author of the bill, Senator Pacquiao, whom I thank for his support, I respectfully seek the approval of this important energy legislation by this esteemed chamber.