Prime Infra’s acquisition of a controlling stake in First Gen’s natural gas business marks a significant shift in the Philippines’ energy landscape, potentially reshaping the country’s power generation strategy for decades to come.
The deal, valued at approximately $1.6 billion, gives billionaire Enrique Razon’s Prime Infra Holdings a 51% ownership position in First Gen’s liquefied natural gas (LNG) operations. This transaction represents one of the largest energy sector acquisitions in Southeast Asia this year and signals growing confidence in natural gas as a transition fuel amid the global push toward cleaner energy sources.
First Gen, controlled by the Lopez family through First Philippine Holdings, has long been a dominant player in the Philippines’ power generation sector. The company currently operates four gas-fired power plants with a combined capacity of 2,017 megawatts, supplying approximately 20% of the nation’s electricity needs.
Industry analysts view this acquisition as strategically timed. The Philippines faces a critical juncture in its energy development as the Malampaya gas field, which has historically supplied most of the country’s natural gas, approaches depletion. According to data from the Department of Energy, Malampaya’s reserves could be exhausted as early as 2027, creating urgent pressure to secure alternative gas supplies.
“This acquisition positions Prime Infra to capitalize on the transition away from coal while addressing the immediate energy security concerns facing the Philippines,” noted Maria Santos, energy sector analyst at Standard & Poor’s. “Natural gas serves as an important bridge fuel as renewable capacity gradually scales up.”
The deal’s structure allows First Gen to retain operational control while gaining a powerful partner with deep pockets. First Gen will continue to manage day-to-day operations of the gas plants, including the newly commissioned LNG terminal in Batangas, which received its first shipment earlier this year.
Financial markets responded positively to the announcement, with First Gen’s stock price climbing 3.7% on the Philippine Stock Exchange following the news. Investor enthusiasm stems partly from the potential for accelerated development of First Gen’s natural gas infrastructure, including possible expansion of LNG import capacity and additional power generation units.
For Razon’s Prime Infra, this acquisition aligns with a broader strategy of expanding its footprint across critical infrastructure sectors. The company already maintains significant investments in water utilities, transportation, and renewable energy projects throughout the Philippines and broader Southeast Asia.
“We see tremendous value in First Gen’s established gas portfolio and believe LNG will play a crucial role in the Philippines’ energy mix for decades to come,” Razon stated in a press release announcing the deal.
The timing coincides with growing global interest in LNG infrastructure. The International Energy Agency projects that global LNG trade will increase by nearly 20% by 2025, driven largely by Asian demand. The Philippines, with its archipelagic geography and growing economy, is particularly well-positioned to benefit from expanded LNG imports.
Environmental considerations also factor prominently in the strategic rationale. Natural gas produces approximately half the carbon emissions of coal when burned for electricity, making it an attractive option for countries seeking to reduce their carbon footprint while maintaining reliable power generation capacity.
However, some environmental organizations have expressed concern that major investments in gas infrastructure could delay the transition to renewable energy. The Philippines has committed to increasing the share of renewables in its energy mix to 35% by 2030, up from approximately 21% today.
“While natural gas is cleaner than coal, it’s still a fossil fuel,” said Antonio Rodriguez of the Philippine Climate Action Network. “Every peso invested in gas infrastructure is potentially a peso not invested in wind, solar, or geothermal development.”
The regulatory landscape adds another layer of complexity. The Philippine Competition Commission will need to review the transaction for potential market concentration concerns, given that the combined entity will control a substantial portion of the country’s baseload power generation capacity.
Energy Secretary Rafael Lotilla has indicated preliminary support for the deal, noting that increased investment in LNG infrastructure aligns with the government’s energy security objectives. “Ensuring stable, affordable power supply remains a national priority, and LNG imports will play a critical role in that equation,” Lotilla said at an energy forum last week.
From a global perspective, the transaction reflects a broader trend of infrastructure investors targeting energy assets in emerging markets. According to data from Bloomberg New Energy Finance, investment in gas-related infrastructure across Southeast Asia has surged by 45% since 2020, reaching nearly $12 billion last year.
The acquisition is expected to close by the end of the first quarter of 2023, pending regulatory approvals and customary closing conditions. Both companies have indicated that no immediate changes to staffing or operational procedures are planned following the completion of the transaction.
As the Philippines continues its economic development, reliable energy supply remains a critical constraint. The country’s electricity costs rank among the highest in Asia, creating a persistent drag on industrial competitiveness and household budgets. Prime Infra and First Gen have both emphasized that improving efficiency and reliability while managing costs will be central to their partnership.
For now, the deal represents a calculated bet on natural gas as the crucial transition fuel for a nation caught between immediate energy security needs and longer-term decarbonization goals.
