Ports and casino magnate Enrique Razon Jr. is set to further expand his stake in the Philippine natural gas sector following government approval of his P50-billion deal with billionaire Federico Lopez.
This comes after the Philippine Competition Commission cleared Razon’s Prime Infrastructure Capital Inc.’s planned takeover of Lopez-led First Gen Corp.’s gas business by acquiring a 60-percent stake.
The deal covers First Gen’s existing gas-fired facilities totaling over 2,000 megawatts, along with the proposed 1,200-MW Santa Maria plant and an interim offshore liquefied natural gas (LNG) terminal in Batangas.
‘First Gen and Prime Infra continue to work toward satisfaction of all other conditions precedent,’ First Gen said in a regulatory filing yesterday.
Upon the transaction’s closing, Prime Infra will own 60 percent of the gas assets, with First Gen retaining a 40-percent interest to ensure continuity and stable operations of the projects.
Prime Infra will likewise take a commanding 60 percent stake in the LNG terminal, while First Gen and Japan’s Tokyo Gas will each hold 20 percent.
Market watchers told The STAR the deal is expected to rival the $3.3-billion LNG venture sealed in January by tycoons Manuel V. Pangilinan, Ramon Ang and Sabin Aboitiz.
According to investment banker Juan Paolo Colet, the takeover of First Gen’s gas assets is ‘very strategic’ for Prime Infra, citing the company’s investment in the Malampaya deep water gas-to-power project.
The Malampaya field, an indigenous gas resource in offshore Palawan operated by Prime Infra unit Prime Energy, has been supplying fuel to First Gen’s power plants for years.
Veteran market analyst Astro del Castillo, meanwhile, said the gas deal is ‘mutually beneficial’ for First Gen and Prime Infra.
Prime Infra would strengthen its foothold in the energy sector, while First Gen could use the fresh capital to focus on developing more renewable power projects, Del Castillo said.