LOPEZ-LED First Gen Corp. is focusing more on expanding its renewable portfolio after selling a controlling stake in its natural gas assets to Razon-led Prime Infrastructure Capital, Inc. (Prime Infra), its chairman said.
“We have always believed that natural gas is the most practical fuel to transition ourselves to a future of renewable energy (RE),” First Gen Chairman and Chief Executive Officer Federico Lopez said in a media release on Monday.
“Our continued presence in LNG (liquefied natural gas) 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,” he added.
Mr. Lopez said the partnership between Prime Infra and First Gen provides the latter with more resources to pursue its various RE projects.
First Gen is selling a 60% equity stake in its subsidiaries managing its gas business to Prime Infra for P50 billion.
Upon completion of the transaction, Prime Infra will own a controlling stake in the Batangas gas-fired power plants, with First Gen retaining 40%.
For the LNG terminal, Prime Infra will hold 60%, while First Gen and Japan’s Tokyo Gas will each own 20%.
The transaction remains subject to the execution of definitive agreements and the completion of closing requirements.
“First Gen’s gas assets, all of which are located in Batangas City, are investments of national significance and indispensable to the country’s energy security,” the company said.
At present, First Gen produces over 30% of the country’s RE supply, most of which comes from nearly 1,200 megawatts (MW) of geothermal generation capacity through its subsidiary Energy Development Corp. (EDC). It also operates close to 300 MW of hydropower generation and 160 MW from wind and solar facilities.
For this year, the Lopez-led firm has allocated a capital expenditure budget of $601 million (P33.5 billion), with the majority of funds earmarked for EDC’s geothermal activities.
Following the gas asset sale, First Gen has more room to expand its RE portfolio to 13 gigawatts (GW) by 2030.
At the local bourse on Monday, shares in the company rose by 16.12% to close at P19.18 apiece. — Sheldeen Joy Talavera