First Gen Rejects $5B Indonesian Offer for Geothermal Unit EDC

MANILA, Philippines — Lopez-led First Gen Corp. is holding on to Energy Development Corp. (EDC), the country’s largest geothermal company, despite a $5 billion (about P315 billion) offer from Indonesia’s Barito Group. First Gen president and COO Francis Giles Puno said EDC would remain with the Lopez Group’s power arm, which is already mapping out its next phase of growth, especially in geothermal space. Over the next five years, First Gen plans to spend up to P160 billion in capital expenditures, with nearly half or P70 billion earmarked for its geothermal business. “If the Philippines wants to grow, I suspect you need companies like First Gen or EDC to continue to find ways to create value for the expansion of geothermal and other renewable energy sources,” Puno said. This comes after PT Barito Renewables TBK made an unsolicited, indicative and non-binding offer to acquire EDC, which could translate into proceeds of around $2.29 billion (about P144 billion) for First Gen. The potential proceeds are more than double the P58.5 billion First Gen invested when it acquired the geothermal company from the government in 2007. However, selling EDC could also mean giving up a business that has long provided a stable source of earnings for First Gen. From January to June, EDC’s attributable recurring income doubled to P3.8 billion from P1.9 billion a year earlier. The strong performance provided a bright spot for First Gen, which saw weaker contributions from its gas and hydropower businesses during the period. Still, any potential takeover of EDC would have to comply with the country’s foreign ownership limits. “There’s a nationality requirement. So even if someone wants to buy 100 percent, that wouldn’t be allowed,” Puno said. In 2022, the government lifted the foreign ownership limits in the renewable power sector, which was previously subject to a 40-percent cap. The move, however, only covers solar, wind, biomass, ocean or tidal energy.