First Gen Corporation’s independent directors have publicly defended the company’s investment in Prime Infrastructure Capital Inc.’s pumped-storage hydropower (PSH) portfolio, saying the transaction underwent rigorous review and is expected to deliver substantial earnings while strengthening the Philippines’ energy security.

In a press statement, First Gen independent directors Alicia Rita L. Morales, Edgar O. Chua, and Manuel Francisco I. Ayala said they remain fully supportive of First Gen’s acquisition of a 33% stake in Prime Infrastructure Capital Inc.’s pumped-storage hydropower portfolio, which includes the 600-megawatt (MW) Wawa facility in Rizal and the 1,400-MW Pakil facility in Laguna.

“We extend this reassurance that, as Independent Directors, we fulfilled our fiduciary duties to First Gen by exercising objective and independent judgment in evaluating the projects,” they said.

The directors added that they concluded the investment would benefit both the company and its shareholders after a thorough review of the projects’ economics and risk profile.

“We went over the projected earnings from the projects, and we are convinced that annual earnings from First Gen’s stake in both PSH projects, estimated at PHP 16 billion upon project completion, have solid basis,” they said.

The statement was issued amid an ongoing dispute involving members of the Lopez family over the Prime Infra transaction and related corporate governance issues at First Gen. The directors defended the agreed valuation of PHP 61.87 billion, arguing it fairly reflects the years of development work and capital already invested by Prime Infra.

The board members also justified the premium paid for the assets, noting that the projects had already achieved key milestones before First Gen entered the partnership. 

These include reaching financial close, securing development rights and authorizations, obtaining offtake agreements, and beginning construction activities.

According to the directors, these accomplishments significantly reduced the development risks typically associated with large-scale infrastructure investments.

“The projects with 2,000-MW combined capacity will likewise help assure the security of the country’s power grid and reduce our reliance on fossil fuel, which we otherwise will have to import,” the press statement said. “As power plants run on clean, renewable and emission-free energy, these PSH projects will also help the country reduce its carbon emissions.”

The directors further noted that both projects have been designated by the government as Energy Projects of National Significance.

Additionally, the independent directors defended the inclusion of a change-of-management-control provision requested by Prime Infra, describing it as a standard feature in large energy infrastructure agreements intended to ensure project continuity and access to technical expertise.

The directors said the provision was “a reasonable stipulation to ensure that the projects are backed by the technical expertise and operational track record necessary for a successful implementation.”

They reaffirmed their support for the transaction, noting that the entire First Gen board approved the investment unanimously.

What are your thoughts on First Gen’s defense of the Prime Infra deal? Share your thoughts. 

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