First Gen hydropower investments to yield P16 billion annually by 2031

MANILA, Philippines — First Gen Corp. of the Lopez Group expects its massive hydropower investments in Prime Infrastructure Capital Inc. to generate about P16 billion in annual earnings starting in 2031.

First Gen president and COO Francis Giles Puno said the company is confident that its planned P62-billion investment in Prime Infra’s pumped storage hydro (PSH) portfolio would deliver strong returns once completed in 2030.

The deal involves First Gen acquiring a 33-percent stake in Prime Infra’s 1,400-megawatt Pakil PSH facility in Laguna and the 600-MW Wawa PSH project in Rizal.

“While these projects require significant upfront capital and several years for construction before meaningful cash flow generation, the long-term economics remain compelling,” Puno told stockholders yesterday.

Backed by a 20-year government offtake contract, Puno said, the hydro projects are expected to generate earnings triple the average contribution of 60 percent of First Gen’s natural gas business from 2019 to 2024.

“This represents one of the largest strategic investments in First Gen’s history: a transformational expansion that materially deepens the company’s renewables platform while positioning it early in what may become one of the most critical segments of the future energy system,” Puno said.

The hydropower deal, however, recently made headlines over the so-called “key man” clauses tied specifically to First Gen chairman Federico “Piki” Lopez.

The Lopez family majority, representing three branches of the clan, said the change-of-management-control provisions effectively shield Piki from ouster.

The majority said the provisions, typically used to prevent hostile takeovers, were never disclosed to the stock exchange, keeping shareholders and even family members unaware of the details.

Also dragged into the Lopez family feud was First Gen’s separate P50-billion sale of a 60-percent stake in its natural gas business to Prime Infra.

Earlier this month, the majority withdrew its Feb. 27 board resolution that sought to remove Piki as president and CEO of Lopez Inc., the ultimate parent firm of the Lopez Group of Companies.

“Now, it’s my hope that this initial step will lead to an amicable, fair and lasting resolution of the rift within the family and the Lopez Group,” Piki said yesterday.

But the First Gen chairman said he remains fully prepared for any outcome from the peace overture, while underscoring his continued commitment to upholding his fiduciary duties to all Lopez Group shareholders.