Razon takes control of Lopez family’s First Gen natural gas business for P50 billion

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First Gen's chairman and chief executive officer Federico 'Piki' Lopez describes the partnership with Enrique Razon's Prime Infra as a major step towards a decarbonized and regenerative future

MANILA, Philippines – Tycoon Enrique Razon’s Prime Infrastructure Capital (Prime Infra) is acquiring a controlling stake in First Gen Corporation’s (First Gen) natural gas subsidiaries.

In a disclosure to the Philippine Stock Exchange on Monday, June 2, First Gen said it had executed a term sheet with Prime Infra for the purchase of a 60% stake in the Lopez family’s gas business for P50 billion, subject to adjustments and modifications.

This means Prime Infra will have majority ownership in the following gas-fired power plants in Batangas City, which account for around 13% of the country’s power generation market:

• 1,000 megawatt (MW) Santa Rita Power Plant
• 500 MW San Lorenzo Power Plant
• 450 MW San Gabriel Power Plant
• 97 MW Avion Power Plant
• Proposed 1,200 MW Santa Maria Power Plant
• Interim offshore liquefied natural gas (LNG) terminal

First Gen’s Santa Rita and San Lorenzo plants are currently under power supply agreements (PSAs) with the Manila Electric Company (Meralco), which services nearly 8 million customers.

Meralco’s PSA with Santa Rita is set to expire in August, while the San Lorenzo deal will expire in 2027.

Razon is no stranger to the natural gas industry as Prime Energy now operates the Malampaya gas-to-power project, which provides around 20% of Luzon’s power needs. The service contract was renewed for another 15 years in February 2024.

Meanwhile, the Lopez Group will retain ownership over the remaining 40% of First Gen’s natural gas subsidiaries in Batangas. The ownership of the offshore LNG terminal will be: 60% Prime Infra, 20% First Gen, and 20% Japan’s Tokyo Gas.

“The Lopez Group’s retention of a 40% ownership of its gas business will assure proper continuity and stability of its gas operating plants, which will, in turn, greatly benefit consumers by way of more stable, predictable and lower prices,” First Gen said.

First Gen’s chairman and chief executive officer Federico “Piki” Lopez described the partnership as a major step towards a decarbonized and regenerative future.

“Our partnership with Prime Infra — built on mutual respect — is a major step in our mission to forge collaborative pathways towards a decarbonized and regenerative future. We have always believed that natural gas is the most practical fuel to transition ourselves to a future of renewable energy. Our continued presence in LNG underlines our view of its important role in maintaining the country’s energy security and at the same time enabling the adoption of more renewable energy. This partnership also provides First Gen with more resources to pursue its various RE (renewable energy) projects,” he said in a statement.

First Gen is the largest producer of renewable energy in the Philippines, accounting for about 18% of the country’s power supply.

Prime Infra and First Gen’s partnership in the LNG terminal will compete with the LNG joint venture of Manny Pangilinan’s Meralco, AboitizPower, and Ramon Ang’s San Miguel, as the three finalized a $3.3-billion deal to build an integrated LNG facility in Batangas earlier this year.

News of Prime Infra’s acquisition excited investors, with First Gen’s share price skyrocketing to 16% to P19.20 as of 10:30 am on Monday trade. – Rappler.com